In strategic planning, the journey from a BHAG (Big Hairy Audacious Goal), through OMGs (Overarching Medium Goals) to OKRs and KPIs (Objectives and Key Results, and Key Performance Indicators) is the process that will effectively transform an organisation’s vision into actionable strategies for success..
The BHAG: Setting the Visionary Target
Your BHAG is the North Star, a compelling vision that defines where your organisation aspires to be in the future. Just like the North Star serves as a fixed point of reference for navigation, a BHAG’s compelling vision is what a company aims for in the long term, providing direction and alignment for its actions and decisions. It represents the ultimate goal that guides the organization’s path toward success.
Whether it’s dominating a market, expanding globally, or revolutionising an industry, the BHAG encapsulates the pinnacle of your ambition.
For instance, imagine your BHAG is to attain a 20% market share within the next five years. This audacious goal is your guiding light for strategic planning. But, like any grand ambition, it needs to be broken down into more manageable chunks that enable us to devise the plans necessary to achieve it.
OMGs: Bringing the Vision Into Focus
OMGs (Overarching Medium Goals) are, as the name suggests, goals which are the waypoints on the map guiding you to your BHAG.
Breaking down your BHAG into a series of OMGs enables you to test the viability of the BHAG and set goals that are more relatable to people. Using the example above, of attaining a 20% market share within the next five years, you might then set a series of OMGs that show where you expect your market share to be at the end of each year on the way to this BHAG.
In the case of larger, more complex businesses, these OMGs would typically be further refined to reflect the goals at a divisional or departmental level, with each division or department, as appropriate, focusing on the next OMG while understanding what the final objective (BHAG) will be.
OKRs: Bridging Aspiration with Action
OKRs (Objectives and Key Results) act as the bridge between your BHAG / OMGs and the practical steps needed to achieve your audacious goal.
The “O” – Objectives – are qualitative, high-level goals that outline what you intend to accomplish. The “KR” portion – Key Results – are the quantitative, measurable metrics that enable you to track your progress toward those objectives.
In this way, OKRs bring clarity and focus to what needs to be done in the short to medium term, providing a roadmap for achieving the BHAG step by step.
Using our previous example of achieving a 20% market share, you might set an Objective for the next year of achieving 10% of the market, and your Key Results might include “Launching two new product lines this year,” “Entering a new international market by year-end,” and “Increasing the customer base by 15% in the next 6 months.” These Key Results transform your ambitious objectives into tangible, attainable steps.
It’s important to remember that OKRs are inherently SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. By adopting this approach, they provide the clarity needed to ensure that your strategic objectives are not mere dreams but concrete, quantifiable targets.
KPIs: Monitoring Strategy in Real-Time
By setting our OKRs, we now know how we can achieve the goals we’ve set for our business, so the next step is to be able to effectively monitor and measure how we’re doing, and this is where KPIs come in.
KPIs, Key Performance Indicators, play the role of monitoring your strategy’s heartbeat in real-time. They are more specific and granular than OKRs, offering immediate feedback on your progress toward objectives.
As you work toward expanding your market presence, your KPIs could include metrics like “Monthly Sales Growth,” “Conversion Rate for New Markets,” and “Customer Retention Rate.” These KPIs act as the pulse of your strategy, providing continuous insights.
The Transition: From OKRs to KPIs
The transition from BHAG to OKRs and then to KPIs is a step-by-step process, shifting from an overarching vision to fine-tuned metrics. Your BHAG sets the ultimate direction, with waypoints defined by the OMGs, your OKRs define the specific objectives that align with this direction, and your KPIs are the detailed, real-time metrics that track your progress.
The Key Results within your OKRs form the basis for selecting relevant KPIs. If one of your Key Results is “Launch three new product lines,” your associated KPIs might include metrics like “Product Launch Success Rate,” “Market Penetration of New Products,” and “Sales Performance of New Product Lines.”
The Art of Selecting KPIs
Choosing the right KPIs is both an art and science. They must closely align with your OKRs, providing actionable insights and relevant feedback. The right KPIs aren’t just any metrics; they are those that have a direct impact on your strategic objectives and are within your control.
When selecting KPIs, consider the factors that significantly influence your strategic success. Think about what’s critical to your business, what directly influences your journey toward the BHAG, and what can be measured accurately and consistently. The goal is to have KPIs that are closely linked to your Objectives and Key Results, offering a clear view of your progress.
Data-Driven Insights: The Fuel for Strategy Execution
Once you’ve selected your KPIs, they become the monitoring system by which you measure your progress on an ongoing basis. Regularly tracking and analysing these metrics provide invaluable data-driven insights. These insights help you identify trends, bottlenecks, and opportunities.
For instance, if your “Monthly Sales Growth” KPI consistently falls short of your target, it prompts you to investigate, which could lead to a re-evaluation of your product strategy, marketing approach, or sales tactics.
KPIs provide the data-driven feedback necessary to keep your strategic journey on course.
Putting it Into Practice: The Planning Process
In the previous article on Crafting a Three-Year Strategic Plan we looked at the importance of starting the planning process early, allowing sufficient time for it to be done properly, and of involving the team from the start, remembering that while the overall goals are cascaded from the top, you need to allow for, and encourage, bottom-up input.
Setting your OKRs is typically an annual process on the road to your BHAG, allowing you to adjust your original thinking to take account of changing conditions, so your annual planning process could look something like this:
- Schedule an off-site leadership retreat in September/October to begin discussing next year’s objectives. Analyse progress on current goals and how the competitive landscape is evolving.
- In October, start drafting high-level company OKRs for the following year and discuss during executive team meetings. Ensure they clearly map back to the multi-year strategic plan.
- In November, finalize company-level OKRs and communicate to managers. Have them work with their teams to develop aligned departmental OKRs, and the KPIs necessary to track them.
- By mid-December, all OKRs and KPIs should be finalized and loaded into your tracking software. Employees should have clear goals as they return from the holidays.
- With the start of the year, officially roll out OKRs in a town hall. Share context about how they support the long-term vision. Clarify expectations around regular check-ins on progress, and provide the KPIs at an individual level.
Business is never static, of course, so you should schedule monthly or quarterly reviews on OKR progress, analysing how key results are trending and whether any adjustments are needed.
In Conclusion
The journey from BHAG to OKRs to KPIs is not just a transition but a transformation of visionary ambitions into actionable strategies. Your BHAG sets the ultimate direction, your OKRs define the specific objectives, and your KPIs are the real-time metrics that track your progress.
Mastering this transition is the key to ensuring that your strategic plan is not just an ambitious vision but a well-structured roadmap to success. The connection between OKRs and KPIs is the secret to effectively measuring and managing your strategic objectives, making your journey both ambitious and achievable.
What’s your organisation’s BHAG, and how are you planning to break it down into OMGs, OKRs, and KPIs to turn it into a reality? Share your insights, challenges, or success stories in the comments below.
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If you’d like learn more on this topic, the following articles and posts might be of interest.
Other articles in this month’s focus on Strategy and Planning:
- Crafting a Three-Year Strategic Plan: The Roadmap to Success
- Boards Shape Strategy – The Critical Role of Governance in Business Success
- Developing a Strategic Roadmap
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Tracking and Updating Your Plan – Ensuring Your Business’s Agility in an Ever-Changing World
Related Posts
- OKR – Measuring What Matters
- Looking Back to Look Ahead
- “The best way to predict your future is to create it.” – Abraham Lincoln
- Pointers to a Successful Future for Your Business
- You’re Driving, But Does Everyone Know The Destination?
- “The best way to predict your future is to create it.” – Abraham Lincoln
- Is Your Strategy Fit for Purpose?
- CEOs – 6 Important Questions to Ask Yourself Before Next Year
Backgrounders:
British Library – Peter Drucker
Forbes – Four Ways To Engage Your Employees
- Management Tip: Don’t Set Goals That Can’t Be Reached
- What OKRs Are, And How To Avoid Three Common OKR Mistakes
HBR – How VC John Doerr Sets (and Achieves) Goals
Mind Tools: SMART Goals
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