Using the OKRs with Balanced Scorecard for strategy planning

Balanced scorecards have been enjoying the status of the most widely used system for strategic planning. But lately, Objectives and Key Results(OKRs), nearly the same as balanced scorecards, are gaining in popularity. Are the balanced scorecards similar to Objectives and Key Results? In what ways are they different? Can the BSC and OKRs be used together? There has always been a comparison as to which one is better. But here, let us get down to the above queries and see how OKRs will work with the Balanced Scorecard for effective strategy planning.

Objectives & Key Results, and Balanced Scorecard coexist. While working with OKRs, you need to think about the Balanced Scorecard perspectives as to which BSC perspectives you are supporting with your current OKRs. On the other hand, when using Balanced Scorecards for your strategy and execution planning, OKRs can help to improve how you align the entire organisation behind your strategy.

How is Balanced Scorecard similar to OKR?

Both of them are designed for :

• Setting goals

• Creating alignment

• Measuring progress

• Improving performance

Both strive to enhance the learning about the improvements in the business outcomes and underline the importance of making progress measurable. Also, both furnish a standardised terminology to analyse the goals, metrics and progress and make these measures visible throughout the organisation. Designed to do roughly the same thing, they are the two sides of the same coin, each having its own benefits and drawbacks. A detailed understanding of both can help fix how they can benefit your business.

Balanced Scorecard is a more robust and comprehensive management strategy which connects the projects. The balanced scorecard management system entitles you to measure performance through four perspectives: Financial, Customer, Internal Processes, and Learning & Growth. OKR is a goal framework. The Objectives qualitatively define the target to be achieved, and Key Results measure progress towards the objective. Every objective has 2-5 key results.

Having a notion of both the systems and how they are similar in purpose, let us see why they exist as two different systems.

• BSC develops the objectives, measures, targets and programs based on the leading and lagging indicators, mainly in the four distinctive perspectives: Financial, Customer, Internal Processes, and Learning & Growth. OKRs offer more flexibility to choose objectives, key results and initiatives according to the team's priorities.

• BSC is typically used annually, while OKRs are set annually and quarterly. Also, the cadence reviews of OKRs are done every quarter, while BSC is reviewed most times annually.

• When the BSC are usually cascaded down to the organisation, OKRs normally do not cascade, instead, they align.

• BSC defines measures as KPIs, each having a target. OKRs, on the other hand, consist of Key Results, a combination of KPIs or metrics and a target.

Can OKR replace Balanced Scorecard?

Every organisation needs a structure. The organisation needs a strategy management that can set priorities and adjust the organisation's direction in response to the changing environment. Effective strategy planning can define how the organisation moves and what actions are needed to progress. Employees find it easy when their work aligns with the organisation's desired strategic outcomes, and they know which framework they should connect to. Using a Balanced Scorecard Strategy Map can help visualise the strategy's cause-effect logic, which lets them understand that objectives form a cause-effect story about how the organisation is creating value.

Using OKRs and Balanced Scorecards Together 

While using OKR to manage employee activities and achievements, they must be aligned with the shared vision and strategy. Adding balanced scorecard principles can make OKR perform effectively on target setting and action planning. To gain complete advantage of the strengths of both tools, a Balanced Scorecard can be used to frame and operationalise high-level strategy. The mission, values, goals, objectives, measures, targets and initiatives should all be aligned so that the teams creating their OKRs understand what the organisation is trying to accomplish. Connecting objectives creates alignment at each level. The BSC strategy map can help leaders craft OKRs by analysing the yearly goals and breaking them down.

Balanced scorecards have grown, and with time, they have taken up the role of creating strategy maps and linking them to the essential elements of the organisation. The present-day Balanced scorecard software systems rule out the disparities with OKRs that we have identified above. It can review the strategies anytime, be it annually or quarterly and align them with the organisational goals. OKRs, thus, are unlikely to replace the balanced scorecard. Rather, OKRs can be integrated with the balanced scorecard to facilitate prioritisation, focus, and action. A Two Speed Execution strategy model, by connecting the intricate objectives of OKRs and the BSC framework, works effectively in creating long-term goals for the organisation.