This article is the last in a series focusing on each component of the OGSM framework. The goal is to break down the framework, sharing the purpose and development process of each element. We hope providing a deep dive into the functionality of the framework will offer a refresh for current OGSM users and inspire others to consider OGSM as their strategic planning solution. If you missed our previous articles on Objectives, Goals and Strategies, you can find them here.
Definition of a Measure
You’ve made it to Measures, congratulations! Measures are the last component in the OGSM framework. But don’t settle in quite yet. After the framework is complete, the work really begins in assigning owners and creating charters for each Initiative, cascading the OGSM down to divisional/functional levels, creating a management routine and finally, execution of your strategies. But we’ll get to that later. For now, pat yourself on the back for the work you’ve put in so far and let’s discuss how Measures help track the success of your OGSM.
Measures are numbers that define an organization’s progress toward delivering a strategy. They should answer the question: Are these Strategies working?
Which if the answer is “yes” should mean that Goals are being met. Goals and measures are related, and link from the top to bottom just as the Objective and Strategies do. If measures are being achieved, then Goals are being met. If Goals are being met, then the Objective is being achieved.
An OGSM is created from the top to bottom but when constructed with proper attention to each component, should also link from bottom to top. Everything should contribute to achieving the Objective.
Measures should be
- Relevant, because they are measuring something that predicts achievement of the strategy.
- Predictive, in that they directly correlate to the success of the OGSM – when Measures are good, we are delivering the Strategy and when Measures are down, we should investigate the cause and adjust.
- Numerical, and if qualitative, able to be converted to numbers.
- Able to be consistently tracked over regular time periods by available resources, or by resources you are willing to assign for tracking.
- Widely accepted by the organization as metrics of success.
Remember, Measures are not the same as Goals. Although both numerical in nature, Measures are assigned to specific Strategies and must be taken into consideration with other Measures to accurately assess progress. This is because they measure specific aspects of the organization. Goals on the other hand, represent more over-arching financial metrics that share the big picture. Goals and Measures must be connected in order to build a holistic picture of the business that accurately assesses where we have been and where the trends are taking you.
How to establish Measures
1. Considering each Strategy individually, answer this question: How will we measure the success of this Strategy?
Each Strategy should have no more than three Measures. As stated previously, it’s important to choose Measures that are meaningful, trackable and that clearly connect to the given Strategy. This will help down the road once the organization has had time to begin executing to not only determine progress, but also make decisions on if Strategies need to be adjusted.
Each Strategy should have no more than three Measures.
Categories of Measures will vary based on the type/size of an organization and function. We often recommend choosing Measures based on the same competitive drivers used to develop Strategies – growth, productivity and people. (Read more about competitive drivers here.)
Common Measures under each competitive driver are:
Growth
- Market share (% by product category)
- Sales growth (% by product category or market segment)
- Customer satisfaction (rated by a quantitative data collection method like Net Promoter Score)
- Brand equity score
Productivity
- Cost avoidance/reductions/savings ($ or %)
- Inventory cost
- Manufacturing efficiency
- Process time(s)
- Order-to-delivery time(s)
People
- Employee engagement survey
- Open job requisitions
- New hire onboarding time(s)
- Training compliance (numbers of people who complete training courses)
2. Build a plan and scorecard to track progress.
Each Measure chosen should be assigned to one owner responsible for tracking the Measure on a regular basis and reporting the results. The owner should report the current baseline Measure as it stands at the time of OGSM development. Timing on tracking will vary between Measures – an employee survey will be conducted annually for example, while inventory cost can be measured more frequently – but owners should report new information as often as necessary for overall OGSM tracking. This information should at a bare minimum be collected prior to quarterly OGSM check-ins set by leadership to keep momentum and allow for changes to the plan.
Measures are where an OGSM is tested, where you assess if the Strategies chosen are the right ones to deliver the Goals and Objective. If you do not measure, you cannot truly understand the effectiveness of your OGSM. Measures are the key to providing the critical information necessary to evaluate the OGSM and make informed decisions on how to improve.
At ArchPoint Consulting, we know a plan that stays on paper is a failed plan. We’re passionate about strategy and its execution to fundamentally change how a business operates and our team is here to help you get back on track. Contact us today.