Is OGSM a Good Approach to Performance Measures?

June 18, 2019 by Stacey Barr

OGSM needs a clearer distinction between its component terms of Objectives, Goals, Strategies and Measures, to avoid the usual problems of measuring strategy.

Word cloud of OGSM terminology

OGSM stands for ‘Objectives, Goals, Strategies, and Measures’. It’s a strategic planning model that is said to have originated as part of the quality movement in Japan, and subsequently developed and brought to America by Procter & Gamble, in the mid 20th century. It was also apparently based on Peter Drucker’s Management by Objectives.

Many Fortune 500 companies use OGSM for their strategic planning approach, which lends it instant credibility. But taking a closer look at how performance measurement fits with OGSM, it’s easy to start doubting its
credibility.

Terminology definitions for OGSM is where the measurement problems start.

We already know there’s a global lack of consistency in performance measurement terminology. Mostly, it’s because we make performance measurement far more complex than it needs to be. Unfortunately, OGSM is not immune to this terminology mess.

There’s already a lot of terminology inconsistency between the most popular online references for OGSM (on the first page of Google search results for the term ‘OGSM’).

Objectives are also defined in these different ways:

  • According to smartinsights.com, an over-arching breakthrough vision that is stable, concise and linked to company mission
  • According to mindtools.com, it also needs to include how the Objective will be achieved (at a high level)
  • According to wikipedia.com, it should be worded as a customised, specific statement that is specific to the organisation
  • According to ArchPoint’s myogsm.com, should define the playing field and the rules for winning, about what success looks like, and not an organisation’s vision or mission
  • According to technologyaround.me, formulate your Objective in a form of a positive statement

Goals are defined in these different ways:

  • According to smartinsights.com, stepping stones to achieving the higher level Objective that are Specific, Measurable, Achievable, Compatible
  • According to mindtools.com, quantitative results of what success looks like for your Objective which should be SMART
  • According to wikipedia.com, should be numeric, usually over three to five years, financial and/or operational and should support the Objective
  • According to ArchPoint’s myogsm.com, usually financial and/or operational and make the Objective visible in measurable terms, and answer ‘what must we accomplish financially?’
  • According to technologyaround.me, unpack your Objective into several aspects that comprise it, make them SMART

Strategies are defined in these different ways:

  • According to smartinsights.com, the choices we make to achieve our Objective that focus us and are flexible
  • According to mindtools.com, how you will achieve the Objective and Goals
  • According to wikipedia.com, should also use words which are focused and clearly written, typically around growth, productivity and people
  • According to ArchPoint’s myogsm.com, descriptions of specific choices that focus an organisation’s plans toward accomplishing the desired Objective and Goals, guide the work activities and allocation of limited resources
  • According to technologyaround.me, answer ‘How would you go about achieving each Goal?’

Measures are defined in these different ways:

  • According to smartinsights.com, numerical benchmarks on our progress which are KPIs used as checkpoints to determine if our Strategies are working
  • According to mindtools.com, should answer ‘are our Strategies working, are we going to meet our Goals, and will we achieve our Objectives and vision within the expected timeframe?’
  • According to wikipedia.com, should be a numeric representation of the strategic that are traceable and have one owner
  • According to ArchPoint’s myogsm.com, numbers that define an organisation’s progress toward delivering a Strategy
  • According to technologyaround.me, answer ‘How will I measure that the strategies were achieved?’

Researching beyond these first five most popular references for OGSM brings up even more disparity, especially in the definition of Measures.

Apart from Strategies, which is fairly consistently defined, can you see the redundancy and contradiction that you’d end up with if you adopted all these definitions of OGSM?

  • Should objectives be about the why, the what, or the what and the how?
  • Should goals be stepping stones, or numerical measures of the Objective, or desired financial results?
  • Should measures track the Objectives and Goals and Strategies, or be milestones of strategy progress (or just targets as another source suggested)?

Can OGSM lead us to measure the right things?

If we don’t have a practical understanding of each part of OGSM, and each part of OGSM isn’t clearly and universally distinguishable from the other parts, we’re going to see problems in the performance measures we end up with:

  • If we don’t define a distinct difference between Objectives, Goals and Strategies, which are so often confused with each other, meaningful and useful Measures will very difficult to choose.
  • If Measures are focused on tracking Strategies, Objectives will remain unmeasured, and have no evidence of achievement.
  • If we adopt the assumption that Measures naturally happen at the end of OGS, we miss out on the opportunity to measure the two basic levels of strategy: the ultimate outcome, and the drivers of the outcome.

How to remove OGSM’s redundancy and contradiction problem.

One potential solution to set up the bits required to achieve something is to align the OGSM terms to the strategic planning terms we use in PuMP:

  1. Performance Result – also called objective, goal, critical success factor, key result area, key result, output, outcome. Using just words, the Performance Result describes clearly and unambiguously a priority that you’re trying to improve. This is what the Objective in OGSM could become, and removes the need for Goals. So we have OSM.
  2. Performance Measure – also called indicator, performance indicator, key performance indicator, KPI, metric, lead indicator, lag indicator, performance index. A Performance Measure is a quantification of the degree to which a Performance Result is
    occurring over time. So we’re moving Measure to a different place in the OSM model, making it OMS.
  3. Target – also called benchmark, best practice, standard. Your Performance Measure tells you what your current level of performance is, but your Target tells you what your desired level of performance is (and ideally also the time by which you want to reach that desired level). Doing this makes sure we remove the misunderstandings of ‘numerical’ and ‘measure’. Now we have OMTS.
  4. Improvement Initiative – also called strategy, project, improvement project, milestone. The actions you have chosen that will close the gap between your current level of performance and your desired level of performance are Improvement Initiatives. These are what your strategic budget invests in. It’s entirely plausible to introduce a second layer of Measures here, that will track the drivers of the Objective, upon which the initiatives or Strategies are based. We have OMTSM.

But I don’t think we need another acronym. Do we really need to make it any more complex than this list of basic elements of a strategy?

OGSM needs a clearer distinction between its component terms of Objectives, Goals, Strategies and Measures, to avoid the usual problems of measuring strategy.
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DISCUSSION:

In light of the points in this article, does the structure and terminology of your strategic planning model help or hinder the selection of meaningful measures of outcomes and their drivers?

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  1. Bronwyn Reid says:

    Stacey I absolutely love this article. Management gurus get themselves (and their clients) tied in knots over definitions. Is this a Strategy or an Objective? Is this a Goal or a Mission?
    The only thing that really matters is the outcome – the Performance Result.

    I’m going to review all our Corporate documents …

    Thanks for your continuing thought leadership.
    Bronwyn

  2. Thanks for opening the debate on this Stacey. It’s bad enough that we can’t even get consistent definitions for Objectives, Goals, Strategies and Measures (in a business context). And the standout for me is that one tends to use these terms as categories into which one can group specific sample goals, strategies etc. For me some of the definitions lead to overlapping category boundaries. Further it seems to me that these terms imply a hierarchy of categories … and again people get confused and treat the categories as a heterarchy (for those unfamiliar with the term it is a system of organisation where the elements of the organisation are unranked or where they possess the potential to be ranked a number of different ways.)

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