Click on the graph to download a big
Strategy Map template in .pdf format
What are the main
principles behind Strategy Maps?
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Strategy
balances contradictory forces.
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Strategy is
based on a differentiated customer value proposition.
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Value is
created through internal business processes.
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Strategy
consists of simultaneous, complementary themes.
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Strategic
alignment determines the value of intangible assets.
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In their 2001 book
The Strategy-Focused Organization,
Kaplan and Norton transformed their
Balanced Scorecard, in 1992
introduced in the Harvard Business Review as a performance measurement
system, to a strategic management system. A lot of that transformation was
done in introducing the so called strategy map.
What are strategy
maps?
A Strategy Map is a diagram that
describes how an organization creates value by connecting strategic
objectives in explicit cause-and-effect relationship with each other in
the four BSC objectives (financial, customer, processes, learning and
growth). See the figure on the left. You can click on the graph to
download a bigger one in pdf format. Strategy Maps are a strategic part of the
Balanced Scorecard framework to describe strategies for value creation.
Here's a description of strategy
maps:
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All of the
information is contained on one page; this enables relatively easy
strategic communication.
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There are four
perspectives: Financial; Customer; Internal; Learning and Growth.
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The financial
perspective looks at creating long-term shareholder value, and builds
from a productivity strategy of improving cost structure and asset
utilization and a growth strategy of expanding opportunities and
enhancing customer value.
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These last four
elements of strategic improvement are supported by price, quality,
availability, selection, functionality, service, partnerships and
branding.
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From an internal
perspective, operations and customer management processes help create
product and service attributes while innovation, regulatory and social
processes help with relationships and image.
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All of these
processes are supported by the allocation of human, information and
organizational capital. Organizational capital is comprised of company
culture, leadership, alignment and teamwork.
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Finally, cause
and effect relationships are described by connecting arrows.
Why strategy maps?
By connecting such things as
shareholder value creation, customer management, process management,
quality management, core capabilities, innovation, human resources,
information technology, organizational design and learning with one
another in one graphical representation, strategy mapping help greatly in
describing the strategy and to communicate the strategy among executives
and to their employees. In this way alignment can be created around the
strategy, which makes a successful implementation of the strategy more
easy. No small thing, bearing in mind that often, the implementation of a
constructed strategy is the biggest challenge.
Although the previous book of Kaplan and Norton already spent
64 pages on strategy maps, you can find the latest, best and most
comprehensive treatment of strategic maps including lots of examples
in their great new book.
More strategic management and corporate finance models
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