I was invited recently to a virtual meeting to lead a discussion on the alignment of business with IT. That segment generated a lot of questions, more than I could answer in the allocated time. What is OGSM? How does it work? How to implement it? These are some of the questions that will be the focus of this post.
What is OGSM?
My first exposure to OGSM was during strategy courses in graduate school and later in an advisory capacity to Fortune 500 organisations.
OGSM is a Strategy Framework (Figure 1) that helps CIOs identify business desired outcomes by identifying Objectives and Goals, then demonstrating to the business how these can be achieved through technology with defined strategic initiatives and measures.
Enterprises will often have a corporate strategy set by the CEO or the board (Figure 2). Each business division will plan its strategy that is aligned with the overall corporate objective. IT leadership is to identify what the distinct business divisions are trying to achieve, then articulate how the technology can help them achieve it.
An example based on real client engagement; I will use to illustrate how OGSM works.
An enterprise organisation had a new CEO join. The CEO’s top priority objective was to double the revenue over the next 5 years.
The CIO agreed that OGSM framework is to be used to align the business with IT to help new CEO achieve corporate key objectives. This meant helping different business divisions develop their OGSM, which in turn will help the CIO plan his OGSM. Based on IT’s OGSM, technology initiatives will be prioritised to surgically map to business objectives. My responsibility was to work with the different divisional heads to help them build their OGSM.
In our example, the head of sales was one of the executive stakeholders I have worked with. The purpose of engagement with sales was to understand their key objectives and challenges. The information gathered will help the CIO articulate to sales how technology can address their business needs.
The head of sales top objective was to meet the CEO’s primary objective, which is to double the revenue in 5 years. This constituted the “what” the division was aiming to achieve.
The Goal part of OGSM provides the scope of the business change needed so CIO can in turn map technology type and scope contribution effort. The goal needs to be measurable to track progress. The head of sales key goal was to increase sales by 15% annually over the next five years. The metrics here are the 15% annual growth rate over a five-year duration.
Strategy in OGSM defines how Objectives and Goals will be achieved. In our example, the 15% growth over 5 years goal was going to be achieved using three strategies:
- Expand into new markets. The organization was going to expand into new markets in China and India.
- Increase sales efficiency. This will be achieved by automating time-consuming core sales and improve sales competency through training.
- Use Artificial Intelligence (AI) and Machine Learning (ML) to increase sales and optimize costs.
Measures are the metrics for strategy just as goals are the metrics for the objective. It is a metric the measures the success of a strategy. For example, automate sales core processes within 12 months is the measure.
Only 30% of Salesforce achieved their quota. There were a few reasons that contribute to poor performance:
Challenge: The sales team spent over 70% of their time on administrative tasks.
Solution: Automate administrative tasks to free sales team to focus on sales.
Challenge: Majority of the sales team lacked in-depth industry knowledge and advanced sales skills. Given sales were geographically dispersed and getting everyone on-site for regular training was not workable or economical.
Solution: Develop an online/remote training capability.
Challenge: Sales lacked the expertise to optimize pricing for every deal. The reason is pricing complex product portfolio is a challenge. There is the added complexity caused by competition, volatile politics, and fluctuating cost of raw material.
Solution: Utilise AI to recommend optimal pricing based on historic and real-time data.
Challenge: Sales have a low closing ration compared to industry leaders. A key reason is wasted time by sales working on poor leads.
Solution: Use AI/ML to predict which leads are likely to progress and become won deals, based on historic data of deals won and lost.
Challenge: Upselling and cross-selling to existing customers have not been very successful due to focus on new business.
Solution: Use Machine Learning (ML) to analyse the existing customer database and identify new business opportunities.
Challenge: Customers leave a massive trail behind of information through their links clicked, searches, chat, e-mails, and a history of purchase decisions. Lack of relevant skills prevents the organisation from gaining valuable insights from all the data collected.
Solution: Machine Learning will recommend relevant sales/marketing content likely to trigger customer engagement.
How did the story conclude?
After 2 years, of implementing OGSM, the organisation is averaging 18% sales growth and is aggressively adopting cloud-based advanced AI/ML capabilities to augment its salesforce.
The organisation is no longer approving any technology initiatives without a “clear line of sight”
The above OGSM diagram (Figure3) helped the CIO provide the CEO and the board a powerful visual that many call “Clear Line of Sight” between strategy corporate objectives and technology initiatives.
Now imagine as a CIO, instead of discussing metrics that cannot articulate the value of IT such as the number of servers patched, uptime, but instead can discuss how you contributed to sales achieving over 15% increase in sales through strategic technology initiatives.
COVID-19 and OGSM
The most important question asked, how can OGSM help with the chaos caused by Covid-19?
Many organisations have been forced to change their business model to adapt to the new normal. They are looking for ways to preserve cash, pursue new revenue opportunities and mitigate against new risks. Covid-19 is changing business priorities which demands alignment of the IT strategy with the ‘new normal’. This means reprioritising and recalibrating the entire projects portfolio to help not only survive Covid-19 challenge today but to thrive and prosper tomorrow. OGSM is the perfect tool to help with the strategic realignment.
I hope you have found this post informative and thank you for reading.
Thank you and be safe.