Planning through Performancesm Brief

Strategy Map
Key Points: A Strategy Map is a systems model that graphically depicts an organizations strategy across four organizational perspectives: Financial, Customer, Internal Process and Learning & Growth. The main strengths of the Strategy Map are threefold: the ability to depict an organizations strategy graphically, the embedding of a set of cause and effect relationships that show how components of the strategy interrelate and the power in communicating complex concepts in a straightforward manner. The process of developing a Strategy Map is a valuable as the Strategy Map itself. Main Thoughts: In 1992 Drs. Robert Kaplan and David Norton developed the Balanced Scorecard a management tool that is perhaps one of the most significant advancements in performance measurement in the past 50 years. However the founders themselves concede that maybe more important was the discovery of the Strategy Map. The Strategy Map is a one page systems model that articulates an organizations strategy across four organizational perspectives. The Financial perspective articulates the critical financial objectives of the organization and answers the question, What results do our owners/shareholders expect from us? Juxtaposed immediately below the Financial perspective is the Customer perspective. The objectives depicted in the Customer perspective answer the question, What do customers want from us? (in essence the value proposition). The next lower perspective is the Internal Process perspective. In it, the developing organization answers the question, At which internal processes must we excel (to deliver on our value proposition)? The bottom perspective considered to be the foundationis the Learning & Growth perspective. It addresses the question, What skills, knowledge, capabilities and organizational capital must our organization have to be successful? All of the objectives linked within and across each perspective depict an organizations strategy at the level where the Strategy Map was created (i.e. corporate, business unit or business function). For years organizations have created annual or multi-year strategic plans. These documents are often times cumbersome and consist of scores if not hundreds of detailed pages that recount market analysis, performance goals, measurement information and action or initiative planning in particular. One of the key advantages of the Strategy Map is that is boils these documents down to a one page diagram that show an organizations main themesthree to five major components of a strategy, objectives20 to 25 key organizational priorities and about as many measures and targets articulated within the framework of the Balanced Scorecard. In addition to being easy to navigate, the Strategy Map also shows how each of these key objectives relate to one another, specifically, in a series of cause and effect relationships. Lastly the Strategy Map is much easier to communicate and contextualize than a hundred page strategic plan. Once the basics of Strategy Map reading are understood, almost anyone can read and understand what the organization is trying to accomplish. The Strategy Map is an essential tool in the battle to improve strategy execution globally. As powerful as the Strategy Map is as a communication device, it is just as powerful when used by management teams as a mechanism to help formulate and gain consensus in support of a new strategy. Because managers have many different conceptions of what strategy actually is, the structure of the Strategy Map helps provide a common platform from which an integrated strategy can be created. This common format paired with the use of common terms, helps
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Planning through Performancesm Brief managers understand what constitutes a strategy and work toward developing one that is more complete than a typical strategic plan often times is. As an Example: The following is an example of a Strategy Map from the American Diabetes Association. This Strategy Map, while organized slightly differently than a typical for profit Strategy Map, incorporates each of the key perspectives as well as a Stakeholder area that is often times essential in the public sector community.

Figure 1: American Diabetes Association Strategy Map (source: knol.google.com) Editorial The Strategy Map really is everything its cracked up to be. Its easy to use, easy to develop, and easy to cascade into an organization to achieve alignment. The comprehensive nature of the tool makes it especially useful as a consensus building and communication device in organizations. It truly is a state of the art management tool and its use in conjunction with the Balanced Scorecard is actually on the rise according to consultants Bain and Company. In my experience, once managers are able to read the map, they start not only discussing the particulars of the strategy, they also start making organizational decisions that support the strategy. This is a powerful breakthrough and is reflective of an organization that truly understands their strategy. This is very rarely achieved through the use of a traditional strategic plan. Finally, tools like the Strategy Map are in step with the most current thinking regarding visualizing strategy in the strategic management process.

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Planning through Performancesm Brief For More Information See: Articles: Kaplan, R. and Norton, D. 2000. Having Trouble with Your Strategy, Then Map It. Harvard Business Review Vol. 78, Issue 5. Text Kaplan, R. and Norton, D. 2003. Strategy Maps: Converting Intangible Assets into Tangible Outcomes, Harvard Business School Publishing, Boston, MA.

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