The Balanced Scorecard (BSC) has enjoyed over 20 years as the most widely used system for measuring and managing performance. So why is Objectives and Key Results (OKRs), a similar system used by Intel and Oracle that actually pre-dates the BSC, getting so much attention? The short answer: Google. In 2013, Google Ventures partner Rick Klau gave a presentation on OKRs that now has approximately 200,000 views.
Many of today’s most successful companies including Google, LinkedIn and Twitter use OKRs. Before comparing OKRs with the BSC, I’d like to stress that OKRs should not be viewed as a replacement for the BSC. In many regards, they serve as complements to each other, as they both:
- Seek to improve learning about how to improve business outcomes.
- Emphasize the importance of making progress measurable.
- Provide a standardized terminology to talk about goals, metrics and progress.
- Advocate making measures visible throughout the organization.
Colleagues of mine are also in agreement with the potential complementary nature of the two methodologies…
“Organizations that have deployed the BSC or other performance management frameworks may benefit by using OKRs to extend their framework deeper into their organizations.” – Wayne Eckerson (BSC expert)1
Another colleague has offered up some recommendations for how to begin integrating OKRs with the BSC…
“An organization creates a strategy. To translate it into action they develop a Strategy Map of objectives, and a Scorecard of measures, targets and initiatives. To generate alignment from top to bottom the next step is cascading. This is where it could prove beneficial to integrate OKRs into the process since they can be derived from the Balanced Scorecard, which is directly translated from the strategy.” – Paul Niven (BSC expert)2
While OKRs and the BSC clearly have a lot in common, the two methods have some key differences. With the growth in popularity of OKRs, it will be interesting to see if organizations that have already adopted the BSC will find ways to incorporate OKRs. I expect organizations may combine the BSC’s strategic elements with OKRs near-term focus.
Given that goal cycles tend to change more frequently at lower levels in an organization, I expect organizations that have adopted the BSC, may benefit by using OKRs to extend their management framework deeper into their organizations.
- Fear of Performance (or…Lions and Tigers and Bears, Oh My) with Wayne Eckerson and Ben Lamorte
- From conversation with Paul Niven on August 23, 2015
- Google began using OKRs when there were roughly 40 employees and a recent study in London concluded that the majority of start-ups in the US and UK use OKRs!
- OKRAlliance.org is an up and coming resource to help support OKRs of note.
- See The Day Marissa Mayer’s Honeymoon at Yahoo Ended article where OKRs were misused.
- See Using the Balanced Scorecard as a Strategic Management System HBR article.