How to Combine BSC, OKR, and North Star Methodologies to Full Effect
5 years ago
Have you read anything about performance management or strategy lately? Then you’ve probably come across phrases like Balanced ScoreCard (BSC), Objectives and Key Results (OKRs), and North Star (weirdly, no acronym). These frameworks have certainly gained momentum lately, but to say that there are a lot of misconceptions surrounding them would be an understatement.
Some say that the BSC approach is very similar to OKRs. Others, that OKR and North Star are basically just two different fancy ways to express the same idea. Well, we say that, like many controversial things in life, BSC, OKR, and North Star are but tools - it is how you apply them, and to which problems, that matters. But it wouldn’t hurt to have them all in your toolbox, anyway.
Whether the method you choose, KeepSolid Goals is your perfect pick!
In this piece, we at Goals by KeepSolid team will discuss the differences between BSC, OKR, and North Star, and how to combine them in the most efficient way. Let’s get started!
First of all, we need to make sure we have the same understanding of the terms BSC, OKR, and North Star. Even if you’re already familiar with the concepts, it might be worth a refresher, if only to ascertain that we’re on the same page here.
What is a Balanced ScoreCard (BSC)
Much like the other two names in today’s article, the BSC is a management and strategy framework. Its main purpose is to allow managers to keep track of the execution of tasks and activities by teams and individual employees, and to see the results and consequences of these actions. It has been a popular tool for decades, and many companies have used it to great effect.
The BSC is designed to help companies clarify, interrogate, and communicate their core initiatives, measures, and strategic objectives. Balanced ScoreCard shows the information across four areas of business that are considered critical for any company’s success.
Learning and growth This area is analyzed through the investigation of knowledge resources and training. How well do your employees capture the information, and how effectively do they convert it into your business’ competitive advantage? This measure will tell.
Business processes (sometimes referred to as internal processes) Here you evaluate how well your products are manufactured. This includes operational management, and this area is investigated to find any gaps, bottlenecks, delays, waste, or shortages.
Customers (or customer perspectives) This part gauges customer satisfaction with price, availability, and quality of your services and products. It’s normally analyzed by collecting client feedback about their satisfaction and experience with your company and products.
Financial data Here goes all the information on expenditures, sales, and income, along with metrics like dollar amounts, budget variances, financial ratios, or income targets. This area evaluates the financial performance of your business.
What is Objectives and Key Results (OKR)
Similarly to BSC, OKRs define a business’ strategic priorities. This methodology considers two components that comprise strategy and execution: Objective (the global overarching goal that your organization strives to achieve) and Key Results (specific, measurable achievements that will help you meet the Objective). Yes, this basically means that OKRs help you answer two questions: where you want to get, and how you are going to get there.
Wouldn’t you know it, just like BSC, OKRs have also been around for decades (since early 80s)! It came as an update to the then-prevalent MBO approach, and has originally gained much renown thanks to Google and, namely, John Doerr, who utilized and popularized OKRs. Lot’s of top Silicon Valley businesses have since then taken the cue and adopted the concept (Twitter, LinkedIn, and Spotify, to name a few). That’s why, despite its age, the OKR methodology keeps getting more and more traction.
Example of Objectives and Key Results
What is North Star
North Star is a relatively younger approach. It claims that all businesses have their key aspect or area that’s far more vital than others. It centers around the concept of a Northstar metric - the single metric that best reflects the core value of your product or service for customers. According to this methodology, to reach success, a company must identify its Northstar metric or area of business and focus on developing it first and foremost.
Following the North Star Methodology provides your business with three major benefits:
Optimization and prioritizing Your teams understand what needs to be done (what’s important for your organization) and can align their efforts on it.
Communicating the results Focusing on a single key area will let you see clearly the progress of your projects and their impact. Which, in turn, will create a feedback loop to further accelerate and boost your strategic initiatives.
Accountability Last but not least, North Star holds the product accountable to an outcome.
Glaring, biggest difference between BSC, OKR, and North Star
If you’ve been following us closely, it might occur to you that the differences between these methodologies are aplenty, so it would take a few posts to even name them. Good job! You’re totally correct, the most obvious difference between BSC, OKR, and North Star is that they’re designed for different purposes, and should be used thusly.
Why use Balanced ScoreCardÂ
BSC is best used for clarifying the desired results and determining the correct metrics for that. This helps translate your goals into action. Also, BSC is great for showcasing and tracking the relationship between different goals, providing what’s basically a strategy map. Finally, since this approach is linked to performance metrics, it allows for a more precise and satisfying compensation management.Â
Why use Objectives and Key ResultsÂ
This method demands to be done more regularly (on a quarterly or monthly basis). This makes it perfect for today’s ever-changing business environment. OKR also allows more liberty when designing Objectives, you have more input in the whole process, and thus can become more engaged.Â
In addition, the OKR process is very transparent - employees can clearly see what goes into it, and how their individual work matters in the grand scheme of things. This causes them to be more ambitious. Coupled with the acceptance (some OKR opponents would even say, encouragement) of failure, this serves as a great motivation. It lets people feel like their efforts are duly noted, even if an external force prevents them from delivering on all the goals 100% of the time.
You could say that, where BSC is all about the travel and OKR is about flexibility, North Star is all about destination. This methodology wants to make sure that all your efforts are focused towards what really matters for your business. This makes North Star ideal for, first and foremost, defining success - what it looks like, what your business truly needs - and setting the course for it.
A good Northstar metric will be a leading indicator of revenue, measure product value and impact, and represent product strategy. More importantly, the goals you set as part of the North Star process are high-level, long-term, and aspirational. They inspire and coordinate both the goal-setter and the executives.
Build and manage your strategy with KeepSolid Goals
Since these two are for the most part competing approaches, there’s not much in terms of direct combination we can do here. However, there’s certainly some lessons we could learn from both worlds.Â
If you prefer BSC more, consider doing it with more frequent reviewing and revisiting (at least on a quarterly basis). This would at the very least not break the system, and you will likely find that this allows your plans to stay more relevant, and your estimations - more precise. Also, consider aiming for more ambitious objectives and designing your BSC in a more bottom-up manner, rather than handing down all goals from on high.Â
If you’d rather stick with OKR, then you could enhance this approach by adding more visualization to it. Compare the following two ways to write OKR - which better communicates the strategy to you? The latter is done via the Goals app, by the way, but we’ll talk more about that later.
How to combine OKR and North Star
Now, in this department there’s more we can do in terms of combining the two approaches. Consider this:
OKR somewhat briefly mentions how to set an Objective. Then it goes to great lengths discussing the methodology of actually reaching your goals - how to define your Key Results, how to track and monitor your teams’ performance and evaluate your movement towards the Objective.Â
North Star, on the other hand, is all about objectives - the whats and the whys, the ins and outs. How exactly you’re going to reach and evaluate them is generally left up to you to determine.
You see where we’re going? That’s right! Just take the meticulous Objective-setting approach of North Star and slap on top of it the OKR’s Key Results methodology and metrics. This way you’ll always be sure that you’re pursuing the goals that actually matter for your business, and that all your activities and initiatives actually focus on and facilitate these goals.
How to use OKR + North Star approach in Goals by KeepSolid
We consider it highly important to use dedicated digital tools for building and managing your strategy, as they offer a few compelling advantages. First of all, as we said before, it’s best to represent your project strategy and plans in a clear, visual manner.Â
Also, making your plans available and transparent to those who will be implementing them - your employees and teams - will always be a great boon. Lastly, they’re easy and convenient to manage, especially compared to more old-fashioned tools.
Here’s an example of how easy it is to build an OKR + North Star strategy in our own web-based planning tool called Goals by KeepSolid:
1. The Goals app is specifically designed to help you focus all your efforts on achieving your overarching Objectives at all times. So, start with creating a new Objective.
2. This is where the North Star part comes in. Enter your long-term, high-level Objective here, along with any additional information.
3. After this, it’s time to turn to OKRs. Determine what Key Results are crucial for the achievement of your Objective and enter them here.
4. This is what your Objective and Key Results will look like.
5. After that, you’ll get access to all sorts of additional features: add specific tasks to each Key Result, appoint team members, see the roadmap of your project, track performance with automated reports, etc.
Ready to give it a try?
Turn all your objectives into actionable plans using the Goals app.
