Written by: Christian Loyer, Managing Director, Loyer Consulting Ltd, and James Milsom
Despite strategy deployment methodologies being around for a while, it is only in the last few years we have heard about specific forms such as OGSM, OKR, and Hoshin Kanri when we speak of the most successful strategy executioners.
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?
Read on to learn why the core differences in delivering strategy 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.
The founding author of Hoshin Kanri is Dr Yoji Akao.
Credit: Lean Strategies International
He developed Hoshin 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).
Manufacturing organizations across Japan and the US were early adopters of this new Hoshin Kanri approach, but today this extends to the likes of HP, Xerox, and AT&T.
An essential part of the Lean methodology, translated from Japanese, Hoshin Kanri means:
Direction (Ho) + Needle (shin) = 方針
Control (Kan) + Reason (ri) = 管理
OKR is a goal management approach designed to align your team and drive engagement of your strategy via measurable, meaningful goals. OKRs should not be confused with traditional KPIs. OKRs are about fast-paced delivery of objectives and regularly tracking results.
Founded by Andy Grove, OKRs came to prominence in the late 1990s.
It was there that a small company known as Google adopted the thinking and vernacular through John Doerr, the renowned ‘Godfather’ of OKR.
OKR stands for:
OKR is adopted by a large number of organizations based in technology and software, including Airbnb, Google, Netflix, and Viacom.
OGSM in the strategic planning world is around defining what your organization wants to achieve, and how you will get there. It is applied during the strategic planning process and ensures clear goals and ownership in ensuring your business acts on its strategic choices and delivers mission-critical goals.
Following World War Two, OGSM began to take root in 1950s Japan out of Peter Drucker's MBO method (Management by Objectives).
OGSM stands for:
Initially developed and brought to prominence by Procter & Gamble, and then car manufacturers, today its adopters are cross-industry, including Coca-Cola, Honda, and MetLife.
“In the majority of cases – we estimate 70% - the problem isn’t bad strategy but…bad execution.” Fortune Magazine
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?
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.
With OKR you drill down only from the objective level through to its key results:
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.
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.
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’.
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 favor 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 rigor that is applied to each methodology. But at the core, they all aim to achieve the same outcome: help organizations deliver on their promises.
We have a wealth of free resources to digest, designed to help you achieve your strategic, improvement, or transformational goals. We've hand-picked the below to set you on the right track:
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.