Use the OGSM Strategy Framework to Align Strategy and PM

This post examines an interesting strategy implementation model, the OGSM framework – composed of Objectives, Goals, Strategies, and Measures.  It outlines the framework, provides lots of examples of each of the components, and provides the linkage between the OGSM framework and both the strategy function and the practice of project management.

What Is the OGSM Strategy Framework?

First, this is really not a ‘strategy framework’ per se, but more of an implementation framework because it is very much focused on implementing strategy. Hence, it’s a great framework for tying together elements of strategy and implementation.

The OGSM strategy framework is effective at lining up disparate parts of an organization in the same direction – and hence is a great alignment tool.

OGSM stands for the following:

• O = Objectives: What are the objectives of the subject organization, business unit, or team?
• G = Goals: What are the common goals across the grouping?
• S = Strategies: More like tactics, how will we go after the determined goals and objectives?
• M = Measures: What measures will we use to determine or progress toward our group’s goals and objectives?

OGSM originated in the early 1950s as part of the efforts at rebuilding Japan in the post World War II era. Some say it may have originated from efforts at Proctor & Gamble, but it has been used extensively and effectively at such organizations as Coca Cola, Reckitt Benckiser, Honda, Mars, and MetLife.

Let’s take a look in some detail at each of the constituent parts, and then look at the impact on strategy and project management.

Objectives in OGSM

Objectives are very broad, high-level statements that provide overall direction. They define what the organization, business unit, or team aims to achieve.

Another key consideration for Objectives is that they should be specific, measurable, achievable, relevant, and time-bound (SMART). This speaks to the M – Measures component discussed below.

Here are some typical example objectives in a number of areas:

Financial:

• Increase revenue by 15% in the next fiscal year.
• Improve profit margin by 5% within the next two years.
• Reduce costs by 10% through process optimization and efficiency measures.

Customer:

• Enhance customer satisfaction levels to achieve a Net Promoter Score (NPS) of 9 or higher.
• Increase customer retention rate by 20% over the next 12 months.
• Expand the customer base by acquiring 1,000 new customers in the target market.

Operational:

• Improve product quality to reduce defects by 20% within the next six months.
• Streamline supply chain processes to reduce lead time by 15%.
• Enhance operational efficiency by implementing lean methodologies and reducing waste.

Employee Development:

• Increase employee engagement scores by 10% through employee recognition and development initiatives.
• Enhance leadership capabilities by providing training and mentorship programs for managers.
• Improve employee satisfaction levels to reduce turnover rate by 15%.

Market Expansion:

• Enter new international markets and achieve a market share of 5% within the next three years.
• Launch new product lines to diversify revenue streams and penetrate untapped market segments.
• Establish strategic partnerships with key industry players to expand distribution channels.

Goals in OGSM

Goals are specific and measurable targets that support the achievement of objectives. They bring objectives down a level in detail and help to more specifically define the desired outcomes. Goals are usually time-bound (the ‘T’ in SMART objectives) and provide a clear focus for actions.

Here are some typical example goals in the same areas as the objectives:

Financial:

• Increase monthly revenue from $500,000 to $575,000 by the end of the fiscal year.
• Achieve a gross profit margin of 20% by implementing cost-saving initiatives.
• Reduce operational costs by $500,000 through process optimization and resource allocation.

Customer:

• Improve customer satisfaction ratings from 8 to 9 on a scale of 10 within six months.
• Increase customer retention rate from 75% to 85% by implementing customer loyalty programs.
• Acquire 200 new customers in the target market within the next quarter.

Operational:

• Decrease product defects from 5% to 4% within the next three months.
• Reduce supply chain lead time from 10 days to 8 days by implementing efficient logistics practices.
• Improve operational efficiency by reducing waste and saving $100,000 in production costs.

Employee Development:

• Increase employee engagement scores from 75% to 85% within one year through regular feedback and recognition programs.
• Provide leadership training to all managers within the next six months.
• Conduct employee satisfaction surveys and reduce turnover rate from 15% to 10% within one year.

Market Expansion:

• Enter three new international markets and achieve a market share of 2% in each market within the next two years.
• Launch two new product lines within six months to diversify revenue streams.
• Establish strategic partnerships with three key industry players to expand distribution channels within one year.

Strategies

in OGSM

‘Strategies’ in OGSM refers to the tactics – the approaches or plans – devised to accomplish the goals and objectives. They outline the key actions and initiatives needed to achieve the desired outcomes.

These strategies, while tactical in nature, need to be aligned with the organization’s overall vision and mission – the organization’s strategy. They can be broad, as required for an overall organization, or more narrow, as for a smaller business unit or even team.

Continuing with the same categories as above, here are some examples of strategies:

Financial Strategy:

• Expand market share by targeting new customer segments through targeted marketing campaigns and promotions.
• Optimize pricing strategies by conducting market research and competitive analysis to maximize revenue and profit margins.
• Implement cost-saving measures, such as streamlining operations, renegotiating vendor contracts, and leveraging technology to reduce expenses.

Customer Strategy:

• Enhance customer satisfaction by implementing a comprehensive customer relationship management (CRM) system to improve customer service and personalized interactions.
• Increase customer retention through loyalty programs, incentives, and proactive communication to strengthen relationships and address customer needs.
• Conduct market research and gather customer feedback to identify new market trends and customer preferences, enabling the organization to tailor its offerings accordingly.

Operational Strategy:

• Implement lean manufacturing principles to improve efficiency, reduce waste, and optimize production processes.
• Enhance supply chain management by establishing strategic partnerships with key suppliers, implementing advanced inventory management systems, and optimizing logistics to reduce lead times and improve order fulfillment.
• Invest in technology and automation to streamline operations, improve productivity, and reduce costs.

Employee Development Strategy:

• Provide regular training and professional development opportunities to enhance employee skills and capabilities.
• Foster a culture of employee engagement and recognition by implementing employee recognition programs, performance feedback mechanisms, and career development paths.
• Establish mentoring programs and leadership development initiatives to cultivate a strong leadership pipeline within the organization.

Market Expansion:

• Conduct market research and analysis to identify new international markets with growth potential and develop market entry strategies tailored to each market.
• Invest in research and development to innovate and launch new product lines that cater to emerging customer needs and market trends.
• Forge strategic partnerships and collaborations with industry influencers, distributors, or complementary businesses to expand the organization’s reach and distribution channels.

Measures in OGSM

Measures (or metrics or key performance indicators (KPIs)), are used to evaluate the progress and success of objectives, goals, and strategies. Wherever something is supposed to happen, it is helpful to have a measure to determine if it did happen.

A Measure itself should be specific, relevant, and measurable (as part of SMART criteria).

Finally, continuing with the same categories as above, here are some examples of measures:

Financial:

• Monthly revenue growth rate
• Gross profit margin percentage
• Cost savings achieved
• Return on investment (ROI)
• Cash flow position
• Budget variance (actual vs. planned)

Customer:

• Customer satisfaction ratings or scores (e.g., Net Promoter Score)
• Customer retention rate
• Number of new customers acquired
• Customer lifetime value
• Average order value
• Customer complaints or service response time

Operational:

• Defect rate or product quality metrics
• Supply chain lead time
• Production efficiency indicators (e.g., cycle time, throughput)
• Inventory turnover rate
• On-time delivery performance
• Waste reduction percentage

Employee Development:

• Employee engagement scores
• Training hours per employee
• Employee satisfaction or feedback surveys
• Leadership pipeline and succession planning metrics
• Employee turnover rate
• Performance evaluation results

Market Expansion:

• Market share percentage in target markets
• Sales growth in new markets or product lines
• Number of international markets entered
• Partnership or collaboration impact (e.g., revenue generated from strategic partnerships)
• Market penetration rate in new segments
• Customer awareness or brand recognition metrics

The Significance of OGSM for Strategy

As I mentioned in the beginning of this post, OGSM is really an implementation framework. While it can help to organize strategies neatly into goals and objectives, the thinking behind the strategies that produce these objectives and goals is separate and missing.

So true strategy is needed! Here are just a handful of frameworks that can help to devise strategies that will feed the OGSM framework:

• BCG Growth Share Matrix – Organizations can identify where business units fit in the matrix – as a Star, Question Mark, Cash Cow, or Dog – and use OGSM to move business units to more advantageous positions in the matrix.
• BCG Advantage Matrix – A good road map is to use OGSM for initiatives to improve competitive advantage. It could be used to produce large or smaller advantages, using many or just a few approaches.
• Porter’s Five Forces – Strategy can be devised using the five forces of Industry Competitors, Buyers, Suppliers, Potential Entrants, and Substitutes. OGSM can be used to implement and monitor each strategy.
• Porter’s Three Generic Strategies – OGSM can be used to implement and monitor progress toward strategies driven by cost, market leadership, or differentiation.
• Simple Rules – Using a more agile approach, organizations can create simple rules that are representative of certain components of OGSM. They can remain fluid and can change those rules based on experience.

There are many other frameworks. The pot is that some strategy development needs to take place and feed the OGSM framework.

OGSM and Project Management

OGSM is a great tool to use across the spectrum of project management. It bridges the gap between strategy and implementation, but also can be used at a more practical level.

Here are some ways to incorporate it:

• Project Management – In managing your team, you can easily use each of the components of OGSM to develop an action road map. At the project level, there is potential of lots of creativity.
• Program Management – This is truly where the strategy and the framework can meet. With the bigger strategic objectives of the program, you can get started leveraging the power of OGSM to implement and monitor.
• Portfolio Management – You can use OGSM to prioritize projects, and monitor project performance and make adjustments across the portfolio.
• Personal Career Management – For both yourself and team members, you can utilize OGSM to personalize the whole process. Be sure to map closely to strategy!

These are just of few of the ways project managers can use OGSM as part of the implement approach to managing projects and programs.

Conclusion and Further Resources

This post examined the strategy implementation model called the OGSM framework – composed of Objectives, Goals, Strategies, and Measures.

Where can you – or have you – use the OGSM framework in your work as a strategic project manager?

Here’s a good 5 minute video on the OGSM framework from Soren Kaplan, PhD, and an OGSM-based tool from Praxie that can help you use it: