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Business Strategy Checklists

Understanding Strategy Maps


Checklist Description

This checklist provides a snapshot of the development, objectives, and applications of strategy maps.

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Definition

A strategy map, devised by Professors Robert S. Kaplan and David P. Norton, is a business management tool aimed at forging a strong link between a company’s long-term strategies and its shorter-term operational activities. The concept of strategy mapping was originally developed by Kaplan and Norton in the “balanced scorecard,” a means of assessing how successful a company is in terms of delivering on stated goals. While the basic notion of the balanced scorecard is “what you can’t measure, you can’t manage,” further work aimed to help companies reassess their strategic goals. Kaplan and Norton subsequently shifted their focus to the principle of “what you can’t measure, you can’t describe” as a means to better utilize companies’ intangible assets to help them achieve their objectives. The principle of strategic mapping of long-term strategy with shorter-term operational activities, previously merely one element of the balanced scorecard, was elevated to become a central strategy management tool.

Strategy maps aim to illustrate how a company links its macro strategy objectives with its key day-to-day operational elements from the four different perspectives: financial, customer, internal processes, and learning and growth. The financial element focuses primarily on enhancing the cost structure and utilizing assets towards greater productivity, while the customer element encourages companies to understand what sets them apart from their competitors. Though all elements of the strategy framework aim to improve areas such as attitudes to quality, service, partnerships, and company branding, the internal processes element aims to develop better product and service characteristics. Finally, the learning and growth element aims for companies to consider the skills and technologies that are needed to support the company’s strategy. In all cases, the strategic mapping process seeks to engrain the appreciation of cause and effect. What can be improved on a “day-to-day level” is significant as, cumulatively, improvements can help improve a company’s daily operational activities, helping it to achieve its longer-term strategic objectives. To better demonstrate the connections, the strategy map features a series of arrows linking objectives with individual operational activities.

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Advantages

  • Strategy mapping demonstrates to employees how seemingly minute improvements to operational activities can, cumulatively, contribute towards major efficiency and strategic objectives.

  • Strategy mapping provides a clear, visual demonstration as to how short-term operational and medium- to long-term strategic objectives are closely aligned, helping to ensure greater “buy-in” from employees at all levels.

  • Strategy mapping helps to demonstrate how a company’s intangible assets can improve stockholder value.

  • Strategy mapping provides a potential solution for managers unable to identify why certain strategies are not delivering tangible performance improvements.

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Disadvantages

  • Strategy mapping requires “buy in” from individuals across all levels of the organization. If management fails to convince the workforce of the potential benefits of a successful medium- to long-term outcome, employees may feel disenfranchised from the potential benefits of improved corporate performance.

  • Though strategic in its macro focus, strategy mapping is unlikely to deliver a single, massive leap forward in any single aspect. Rather, the considerable ultimate benefits of strategic mapping are often comprised of many, seemingly minor, single aspects.

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Action Checklist

  • Ensure that everyone within the organization appreciates that strategy mapping is a technique which aims to align individuals’ actions with the strategic objective.

  • As improvements are likely to be incremental, ensure that the benefits are recognized and built on through an emphasis on the feedback/learning input.

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Dos and Don’ts

Do

  • Aim to align personal performance improvement goals with those of the company.

  • Base remuneration on goals related to improvements in the performance of the overall business. Setting individual performance objectives with related incentive payouts could be counterproductive if individuals shift their focus from delivering collective benefits to the pursuit of personal objectives.

Don’t

  • Don’t expect giant and immediate leaps forward in terms of operational efficiency, finances or customer experiences. Strategic mapping is more likely to generate numerous, gradual, incremental improvements across the organization.

  • Don’t set remuneration based on individual targets. Agree only on personal performance goals when you are confident that achieving them will contribute to overall performance improvement across the business.

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Further reading

Books:

  • Kaplan, Robert S., and David P. Norton. Balanced Scorecard: Translating Strategy into Action. Boston, MA: Harvard Business School Press, 1996.
  • Kaplan, Robert S., and David P. Norton. Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Boston, MA: Harvard Business School Press, 2004.

Articles:

  • Irwin, D. “Strategy mapping in the public sector.” Long Range Planning 35:6 (December 2002): 637–647. Online at: dx.doi.org/10.1016/S0024-6301(02)00158-9
  • Kaplan, Robert S., and David P. Norton “Having trouble with your strategy? Then map it.” Harvard Business Review (September–October 2000). Online at: tinyurl.com/33zoowa
  • Scholey, Cam. “Strategy maps: A step-by-step guide to measuring, managing and communicating the plan.” Journal of Business Strategy 26:3 (2005): 12–19. Online at: dx.doi.org/10.1108/02756660510597065

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