Difference between OKRs and BSCs for Startups

🎯 OKR Planning
Jul 14, 2021
Difference between OKRs and BSCs for Startups

You may have come across the term Objective and Key Results (OKRs) if you've recently read anything about strategy and performance management. OKRs are gaining a lot of traction lately. However, a lot of people find the OKR framework quite similar to the Balanced Scorecard method.

Both OKRs and BSCs (Balance Scorecards) are change-inducing systems for a startup. They both aim to clearly define what a startup is attempting to accomplish, connect the departmental activity with strategy, and track all strategic progress toward pre-determined goals.

While OKRs and BSC have lots of similarities in terms of aim, they have a lot of differences in terms of strategy and general tactics for attaining the goal. Let’s have a look at those.

What are OKRs?

The structure for creating and tracking objectives and their accomplishments is called objectives and key results. The strategy and execution are broken down into two parts: objectives and key results. In other words, you establish ambitious goals and then plan how to attain them. OKRs purpose is to help a startup outline how to attain goals by taking real, explicit, and quantifiable activities.

Defining your OKRs. (via What Matters)

What is a Balanced Scorecard?

In the 1990s, the Balanced Scorecard became a prominent strategic framework for translating strategic objectives into results. The Balanced Scorecard, created by Robert S. Kaplan and David P. Norton is still a popular strategic management paradigm for startups.

The BSC is a four-part strategy framework that outlines a startup's key strategic priorities. Finance, Customers, Internal Processes, and Learning & Growth are the four viewpoints that are deemed important to a startup's performance management, and the BSC is meant to assist the entire startup to explain its primary objectives, initiatives, and metrics in each of these four areas. It's a tool for managing the performance of a startup.

For decades, the BSC has been a widely used management tool, with many successful companies utilizing it to explain and convey their strategic business goals. Later, Kaplan and Norton proposed the Strategy Map as a tool to help in the development and execution of the Balanced Scorecard approach.

A strategy map: Transforming Society through the provision of ultra-high speed mobile information services (via Intrafocus)

What is the difference between OKR and BSC

Both frameworks have a lot in common. However, they have certain distinguishing characteristics. 

  • Cadence
    Most startups write objectives and measurements for their Balanced Scorecards that are intended to last at least a year, if not longer. Most businesses, on the other hand, update their OKR framework every quarter and concentrate on what may add the most value in the following 90 days.
  • Creation Parameters
    Organizations set objectives and measurements in four separate but linked perspectives of performance when creating a Balanced Scorecard: financial, customer, internal processes, and learning and growth. OKRs, on the other hand, aren't based on views. The focus is once again on what’s most essential in the coming quarter.
  • Frequency of Use
    The OKR framework is now done on a more frequent basis. BSC is typically performed once a year. OKRs, on the other hand, are usually reviewed and updated quarterly, if not regularly. A quarterly assessment of aims and outcomes is far more sensible in today's fast-paced corporate environment when it appears that we live in a continual state of change.

  • Intentions of Goal-Setting
    People are encouraged to be more ambitious by OKR. Within OKRs, being ready to fail is a key notion. Instead of creating objectives that are easy to attain, the aim is to set goals that are bold and inspiring. If you just obtain some of the important achievements with the OKR framework, that's OK; you've still accomplished more than you would have without the lofty aim. People at BSC, on the other hand, are required to meet all of the objectives.

  • Performance-related Pay
    OKR has nothing to do with compensation or bonuses. The separation of OKR from remuneration and incentives is a positive thing. BSC, on the other hand, is frequently related to remuneration and bonuses, but only to a limited extent. I constantly tell my clients to keep performance indicators and pay separately.

OKRs or BSC?

Both Objective and Key Results (OKR) and Balance Scorecard (BSC) techniques are useful in their own ways. We all know that things are changing quicker than ever, therefore having measurements that allow us to be flexible in our approach is critical, something OKR frameworks excel at.

Startups using the OKR framework may use the Balanced Scorecards to assess their existing OKRs for excessive focus as well as renegotiate current OKRs to ensure that they are taking a balanced approach to their performance. OKRs also increase operational agility for businesses using the Balanced Scorecard framework enhancing how employees integrate their strategic intent.

These tools aren't like a piece of software that you install and then use. Both require care, as well as cultural integration. As a result, someone (or a group, depending on the size of the business) must continue to control the process.

Amit Khanna - 7 startup Advisory
Amit Khanna, Founder, 7startup

Amit Khanna is the founder of 7startup.vc and has 19 years of experience with Startups and the Enterprise, holds an MBA, focusing on Growth and Investments. Amit supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, fundraising, and scaling up.

Tags: Startup funding, venture capital, HR for startups, scaleups, fundraising, pitch deck review, OKRs, BSC, balance scorecards