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Strategy Map

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A strategy map is a diagram that describes the primary business strategy being pursued by an organization by logically linking objectives into a flow chart format. It is most commonly seen as an element of the documentation associated with the Balanced Scorecard (BSC), a system designed and presented in papers and books by Drs. Robert S. Kaplan and David P. Norton.

Contents

[edit] The Balanced Scorecard

Kaplan and Norton first introduced the Balanced Scorecard in their 1992 paper in the Harvard Business Review titled “The Balanced Scorecard – Measures That Drive Performance.” In their first of three books on this subject published in 1996, “The Balanced Scorecard – Translating Strategy Into Action” they more deeply developed the idea of establishing a set of strategic measures over four separate “perspectives”: Financial, Customer, Internal Processes, and Learning and Growth. The central notion was that organizations respond positively to well-designed key measurements and that those measurements should consider much more than just financial results. The authors essentially made a progress report on their efforts to work with companies to implement the BSC and described many cases with rapid impressive results.

[edit] The Strategy-Focused Organization

In their second book published in 2001, “The Strategy-Focused Organization – How Balanced Scorecard Companies Thrive in the New Business Environment,” the authors expanded on the strategic management system introduced in the BSC and showed how successful adopters followed five management principles to become “strategy-focused:”

  • Translate strategy to operational terms
  • Align the organization to the strategy
  • Make strategy everyone’s everyday job
  • Make strategy a continual process
  • Mobilize change through executive leadership

They summarized their thesis with an equation:

{Breakthrough Results}={Describe the strategy}+{Measure the strategy}+{Manage the strategy}

In working with companies they started each engagement by getting the executives to agree on word statements of their objectives in the four BSC perspectives. Once agreed, these statements made the selection of measurements much easier. And that usually the objectives would remain the same even if the measures evolved with experience. This led them to the insight that “objectives should be linked in cause and effect relationships.” In doing so they created diagrams showing these relationships and named them strategy maps.

[edit] Strategy Maps

Their third book in the series was “Strategy Maps – Converting Intangible Assets into Tangible Outcomes.” It goes into much more detail on how to describe and visualize strategy using linked objectives. In it they also presented the above equation a bit differently summarizing their efforts over more than 20 years:

{Breakthrough Results}={Strategy Maps}+{Balanced Scorecard}+{Strategy-Focused Organization}

[edit] Sources

  • “The Balanced Scorecard,” Kaplan and Norton, 1996 Harvard Business School Press
  • “The Strategy-Focused Organization,” Kaplan and Norton, 2001, Harvard Business School Press
  • “Strategy Maps,” Kaplan and Norton, 2004, Harvard Business School Press

[edit] Other Resources

[edit] Author

The author of this article is John Macpherson.

John Macpherson is currently Chairman of the Board of the Anvil Corporation. Anvil is a 100% ESOP-owned corporation providing full-service engineering, design, procurement, and project management services in the U.S. and Canada.

John joined Anvil in 1971 and served as Anvil's President from 2003-2009. He has extensive experience in business management, engineering management, project management, and design engineering, primarily for the petroleum refining industry. John led Anvil's efforts to apply computer technologies to all aspects of engineering, project management, and resource management.

John holds a B.S. in Mechanical Engineering from the University of California at Davis. He also attended the Program for Management Development at the Harvard Business School. He holds Professional Mechanical Engineer licenses in the States of Washington and Alaska.


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