Are there any differences between the three prominent strategy deployment methodologies of OGSM, OKR and Hoshin Kanri?
Written by: Christian Loyer, Managing Director, Loyer Consulting Ltd
Despite the fact Strategy Deployment methodologies have been around for a while, it is only in the last few years that we have heard about specific forms such as OGSM, OKR and Hoshin Kanri when we speak of the most successful strategy executioners. Read on to learn why the core differences could boil down to terminology, and what makes each methodology.
To begin, the most robust and complete methodology in the market today (according to many practitioners); Hoshin Kanri, has been around since the 1950s.
Its author Dr Yoji Akao developed it after creating the Quality Function Deployment (QFD) / House of Quality, a tool that helps organizations improve their decision making. All of a sudden, Hoshin Kanri helped Japanese organizations think top-down in a more structured way, rather than only bottom-up with their production systems (Lean in today's language).
But why this resurgence on strategy deployment methodologies? And what are the differences between the dominant players?
Well, we at i-nexus are ideally positioned to answer this question as we deal with organizations who have the same goal: to deploy their strategy in a much more disciplined way. After all, why invest so much in defining an amazing strategy with an army of consultants, off-site meetings at exotic locations, for that strategy to remain unexecuted?
“In the majority of cases – we estimate 70% - the problem isn’t bad strategy but…bad execution.” Fortune Magazine
Methodologies to turn strategy into actionable projects
Executing strategy is hard. Where do you start? How do you do it? How do we break down the vision into objectives and then into projects?
Enter Hoshin Kanri (also sometimes called Policy Deployment), OGSM and OKR - not to mention other methodologies. Those methodologies are there to help organizations break down their strategy into actionable projects.
In this article, I want to answer one of the more frequent questions we get asked when presenting Hoshin Kanri at conferences, webinars and seminars: what’s the difference between the methodologies?
Same book but different page – methodologies to execute strategy
At their core, strategy methodologies all aim to achieve the same outcome: help organizations execute their strategy. The main difference is they use different languages and drill down to varying degrees.
Here’s what that can look like from an OKR vs. Hoshin Kanri vs. OGSM perspective.
Objectives and Key Results (OKR) methodology
With OKR you drill down only from the objective level through to its key results:
Hoshin Kanri methodology
Unlike OKR, with Hoshin Kanri there is, in theory, no limit to your drill down:
In this screen from our i-nexus strategy execution software, you can see that Breakthrough Objective 3 (BO3) has been broken down into Annual Goals and if we expand Annual Goal 8 (AG8), it has a subset of Improvement Priorities (IPs) which could be broken into further sub-objectives and projects.
Here, IP03 has two metrics associated with it and a further sub-objective. This cascade can (but does not need to be) be endless, helping you drill down to very specific actionable items of work.
This cascade can be represented in an X Matrix format as well (it's easy to switch from a causal tree to X matrix view in i-nexus:
For the sake of convenience, I have highlighted in green the route I presented to you earlier: BO3 > AG8 > IP03. And for those of you who have never seen the Hoshin-Kanri matrix, I will write a follow-up blog on this subject very soon.
Objectives, Goals, Strategies & Measures (OGSM) methodology
As for OGSM, the breakdown is also quite infinite but uses a more visual cascade typically in a PowerPoint presentation where the head of a function, let’s say the SVP of Supply Chain Global, will present its OGSM:
From this OGSM, direct reports to the SVP of Supply Chain Global, such as the regional VPs, will create their OGSM. In turn, the country Supply Chain Directors will create their OGSM and then the Plant Managers will do the same. The result is a massive PowerPoint deck that tries to capture the cascade of objectives.
This is what an OGSM would look like in PowerPoint:
The arrows are there to give you a feel of how the different OGSM connect, not that this would be visible in a deck, you would have to figure this by yourself.
Apples and oranges? A top line comparison of strategy methodology
My objective with this blog was not to give you a summary of the advantages or disadvantages of each methodology, but to answer the question: what is the difference between them?
Well, first, let me say this is like comparing languages.
At first glance, the words ‘good day’ and ‘bonjour’ look very different from each other, but if one speaks both English and French, one knows it means the same thing.
The same is very true with strategy deployment methodologies: they all use a different language.
For example in Hoshin Kanri, the vision is very often referred to as ‘True North’.
Also true are strategies being referred to as ‘Initiatives’ in OGSM or ‘To-dos’ in OKR. And even that is not standard terminology; we have Hoshin Kanri clients who don’t use the terminology ‘True North’ as per its inventor, opting instead to use ‘Vision’ or even ‘Mission’.
Compare and contrast table
In the table below I have made the best attempt at comparing each level and aspects of the various methodologies:
Note that the OKR cycle is not annual as Hoshin Kanri and OGSM, but quarterly, and that is why you will not have 3-5 years objectives in OKR. This is also why Google and other Silicon Valley organizations will favour OKR, whereas Hoshin Kanri is adopted more by the Lean organizations (which I’ll touch upon in a future blog).
In conclusion, the difference is mainly language first and second the rigour that is applied to each methodology. But at the core, they all aim to achieve the same outcome: help organizations deliver on their promises.Want to learn more about Hoshin Kanri? Be sure to download our free 24-page eBook as we explore everything you need to know about sucecssfully deploying your strategy in 2020 and beyond!
Want to learn more?
We have a wealth of resources freely available to digest, all designed to help you achieve your strategic, improvement or transformational goals. We've hand-picked the below to set you on the right track:
- Hoshin Kanri v 4DX v MBO: Part two in our comparison series - how does Hoshin compare to the Four Disciplines of Execution and the classic Management by Objectives?
- Why you need to implement catchball for your goal cascade: Great strategies make use of the catchball process. Here's what that means, how you can integrate it or optimise your current use.
- The Ultimate Hoshin Kanri Jargon Buster: Your guide to over 30 phrases used in Hoshin Kanri, from Annual Objectives to the X-Matrix.
About the author
Christian is the Managing Director of Loyer Consulting Ltd. With a rich background in the industry, today he uses his 20 years experience to make things more digital for his clients. He helps them to get away from the heavy lifting of executing strategy, managing projects and following-up on KPIs with spreadsheets, PowerPoints and SharePoint sites.
If you’d like to talk more about your strategic challenges, reach out to Christian on LinkedIn for more strategic insights.