4 - Strategy Maps - Intrafocus · Appendix – Sample Strategy Maps ... The link between the...
Transcript of 4 - Strategy Maps - Intrafocus · Appendix – Sample Strategy Maps ... The link between the...
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TableofContents
TableofContents................................................................................................1
WhatisaStrategyMap?.....................................................................................2
HowtoBuildaStrategyMap..............................................................................4
MissionandVision...........................................................................................4
Perspectives.....................................................................................................5
StrategicThemes..............................................................................................5
StrategicObjectives.........................................................................................7
Software...........................................................................................................9
Appendix–SampleStrategyMaps....................................................................11
Publicsectorexample....................................................................................11
Basicemptytemplate....................................................................................12
Focusoninternalthemes...............................................................................12
Withprominentmissionandvision...............................................................13
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WhatisaStrategyMap?
In2001KaplanandNorton1published“TheStrategyFocusedOrganisation”whichintroducedtheStrategyMapasanintegralpartoftheBalancedScorecardperformancemanagementsystemthustransformingitintoastrategicmanagementsystem.
AStrategyMapisadiagramthatdescribeshowacompanyororganisationcancreatevaluebylinkingstrategicobjectivesinacauseandeffectrelationshipbasedonthefourBalancedScorecardPerspectives:Financial,Customer,InternalProcessesandLearning&Growth.ThekeyelementoftheStrategyMapisthatitislinkedto‘scorecards’thatmonitorprogresstowardstheStrategicObjectives.The‘scorecards’willinclude:metrics,targetsforthemetricsandstrategicinitiativestodriveperformancetowardsachievingthemetrics.Anexampleofagenericstrategymapcanbeseenbelow:
Note:editablePowerPointtemplatesforalloftheStrategyMapsshowninthisdocumentcanbefoundinthe‘Resources’sectionoftheIntrafocuswebsite.
1DrRobertKaplanandDrDavidNortonarealsotheauthorsofTheBalancedScorecard–TranslatingStrategyintoAction,HarvardBusinessSchoolPress1996
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ClearlyfortheabovediagramtobeusefulthegenericneedstobespecifictothecompanyororganisationthattheStrategyMapisbeingproducedfor.However,asaframeworkand‘strawman’theaboveisveryuseful.Thefirstinsighttobegainedisthatanentirecompanyororganisation’sstrategycanbeplacedonasinglesheetofpaper(orsinglescreen).
ThisisoneofthemostinvaluableaspectsofaStrategyMap,itprovidesatalkingpoint,somethingthattheexecutive,managementandinfacteveryoneinacompanycanlookat,examineandrelateto.Inaninstant,themeanstocommunicateacompanystrategyhasbeencreated.
Overall,therearefourmajorreasonswhyaStrategyMapshouldbecreated:
1. Itprovidesaclearandconcisemeanstocommunicateacompanystrategy.Researchhasshownthatlessthan10%ofemployeeshaveaclearunderstandingoftheircompany’sstrategy2.Thesameresearchhasalsoshownthat50%ofexecutivesspendlittleornotimeonstrategicdiscussion.
2. Itfocussesattentiononkeystrategicobjectivesandconsequentlykeystrategicmetrics.EarlyuseofBalancedScorecardshadalowsuccessrateasthemetricswerechosenfromoperationalmetricsalreadyinuseratherthanmetricstodrivestrategy.
3. Itprovidesagoodmodelforwhatisactuallydrivingthestrategy.Withthefocusonmeasurableobjectivesandstrategicinitiativescomesfeedbackonwhatworksandwhatdoesnotandthereforechangescanquicklybemadetoreinforcethestrategy.
4. Clearstrategicobjectivesdriveclearstrategicinitiatives.Atatimewhenbudgetshavetobemanagedcarefully,theStrategyMapprovidesthemeanstoidentifyexactlywherestrategicfundingshouldbeappliedforthebestresults.
2KaplanandNorton,TheExecutionPremium:LinkingStrategytoOperationsforCompetitiveAdvantage,HarvardBusinessPress,2008
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HowtoBuildaStrategyMapMissionandVisionAStrategyMapcannotbecreatedwithoutmeaningfulmissionandvisionstatements.TheybecomethefoundationoftheStrategyMap;theyaretheover-archingstatementsofpurposethatencapsulatetheultimategoal(s)ofthecompanyororganisation.Traditionallya‘Mission’describeswhatacompanydoesbesteverydayanda‘Vision’iswhatthefuturelookslikebecausethemissionisdonesowell.
ForMissionthink:Managingwithgreatnessandstrength,improvingeverythingdaily.
ForVisionthink:Leadingwithinspirationandcourage,obsessedwithfuturepossibility
Thesetwostatementssuggestthatboththemissionandvisionshouldbeinspiring,theyshouldbesomethingthateveryoneinacompanywantstogetbehindandbelievestobetrue.Alltoooftenmissionandvisionstatementsaregenericanduninspiringorworselongandlaborious.AnexampleofagoodmissionstatementcomesfromNike:
• “TobringinspirationandinnovationtoeveryathleteintheWorld”
TheNikevisionstatementhoweverleavesalottobedesired:
• “Tobethenumberoneathleticcompanyintheworld”
Interestingly,theNikevisionstatementofthe60’swassomewhatmoreinspiringifnotalittleaggressive:
• “CrushAdidas”
Therearemanygoodbooksonhowtodevelopastrategicfoundationincludingmissionandvisionstatements.Althoughtheymaydifferinmethodology,withoutexception,allagreethattheseniormanagementteammustbeactivelyinvolvedintheactivity.ThisisalsotrueoftheStrategyMap.Thisisnotanactivitythatshouldbedevolvedtomiddlemanagementoranexternalconsultantandthen‘signedoff’bytheexecutive.Justastheseniorexecutivesownthestrategy,theymustalsoowntheStrategyMapanddiscussandagreeitscontent.
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PerspectivesThelinkbetweentheBalancedScorecardandtheStrategyMapbecomesimmediatelyapparentupontheintroductionoftheKaplan/Nortonfourperspectives.Itisthis‘balance’thathasproventobesosuccessfulinthemethodologyoverthepastdecadeorso.Relyingonfinancialmeasurescanonlytakeabusinesssofar,whilefinancialmeasuresareessential,theycanonlymeasureresults,i.e.whathashappenedinthepast.Theyarenotpredictiveandthereforecannothelpdriveabusinessstrategy.
TheclassicBalancedScorecardincludesfourperspectives:Financial,Customer,InternalProcessesandLearning&Growth.Strategically,forprofitorientedbusinesseswecanseethatthisorderisimportantbyaskingaseriesofquestions:
• Whatdoourfinancialresultshavetobetosatisfyourstakeholders?
• Whatmustweachievewithourcustomersandthemarketplacetosuccessfullyreachourfinancialresults?
• Whatmustweachievewithourinternaloperationsforsuccesswithourcustomersandmarketplace?
• Whatmustourpeople,culture,intellectualcapitalandITbetosucceedwithourinternaloperations?
Inthiswaywecanseethatstrategicobjectivesinthelowerlayersoften(butnotalways)feedintotheupperlayers.Fornon-profitorganisationsthismaynotbethecase,itmakessenseforsomenon-profitorganisationswithfixedbudgetstoputthefinancialperspectiveatthebottom.
Thenamesoftheperspectivesmaynotfitacompanyculture;againthisismoreoftenthecasewithnon-profitorganisations.Itisperfectlyacceptabletore-nametheperspectiveorindeedtoaddperspectiveswhereaspecificareaisofgreatimportancetoacompany.Inrecentyearstheadditionofan‘Environment’perspectivehasfrequentlybeenseen.
StrategicThemesThesubjectofStrategicThemesisoftenhotlydebated.WehavetobeverycarefulnottoaddunnecessarycomplexitytotheStrategyMapbyaddinglayersofnon-actionableinformationwhileatthesametimeprovidingameans
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forallpartsofanorganisationtoidentifywithandbepartofthecompanystrategy.
ThefocusoftheStrategyMapistohighlightthevitalfewstrategicobjectives,thethingsthatwhenimplementedwillcontributetothestrategy.Theseobjectiveswillalmostcertainlyberelatedandthereforecanbecombinedintostrategicthemes,thequestionisdoesthishappenbeforeoraftertheevent?
Thepuristwouldarguethatthestrategicthemesarethemain,highlevelbusinessstrategiesthatformthebasisforanorganisation’sbusinessmodel.ThereforethethemeshavetobedefinedbasedontheVisionandbeforestrategicobjectivesareputinplace.However,itiscanbearguedthatstrategicthemesarebytheirverynatureall-encompassingandvaguethattheyactuallyaddlittlevaluetotheprocessofdefiningstrategicobjectives.Examplesoftypicalstrategicthemesinclude;businessgrowth,operationalexcellence,customerservice,innovation,sustainability,serviceexcellence,productdevelopmentleadershipandcontinuousimprovement.Ascanbeseenfromtheseexamples,withoutstrategicobjectivesandaccompanyingmetricsthestrategicthemesarealldesirableandcouldbeappliedtoanybusiness.Theydonothowevergiveusaclueastowhatshouldbedonespecificallytoimproveabusiness.
Astrategicthemedoesprovidethemeanstobundleandmanagestrategicobjectives.Thiscanbeausefultooltolimitthenumberofstrategicobjectivesthatappearaspartofastrategy.Duringstrategicplanningsessionsthedesireto‘addanotherproject’isalwayshighandstrategymapsoftenendupwiththirty,fortyoreventfiftyobjectives.
Itisworthnotingatthispointhistoryhasshownitisbettertofocusonasmallnumberofthingswhereastructurecanbeputinplacetoinfluence/changebehavioursandoutcomesratherthantospreadtheworkloadsothinlythatnothinggetsachievedatall.Thereisanoldbusinessstrategyadagethatstates–ifyourstrategyhas3objectivesyouwillsucceedinall3,ifithas4-10objectivesyouwillsucceedin1-2,ifitcontainsmorethan10objectivesyouwillsucceedinnone–asimplecaseofthelawofdiminishingreturns.
Afirstcullcanbemadebyaskingthequestion“doesthisobjectivecontributetoourVision?”Thesecondcullcanbemadebyaskingthequestion“doesthisobjectivecontributetoourStrategicTheme?”.
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ItisdowntoindividualpreferenceastowhetherornotstrategicthemesareincludedinaStrategyMapandiftheyare,shouldtheybedefinedbeforeoraftertheevent.Whateverthechoice,keepthestrategicthemestoaminimum,donotspendtoomuchtimeonthemandfocusyourattentiononstrategicobjectives.
StrategicObjectivesAstrategicobjectivemustcontributetothevisionandthereforethestrategy.Anorganisationwillhavelotsofactivitybeingundertakenaspartofitson-goingoperations,caremustbetakenavoidreflectingtheoperationalmapintheStrategyMap.RemembertheStrategyMapisaboutfulfillingthevision;thevisionisastatementofwherethecompany/organisationwantstobeinthefuture.
ThebasicruleisthattheStrategyMapshouldcontainthecriticalfewfinancialandnon-financialobjectives,whichcanbemeasuredandwilldeliverthesuccessofthecompany/organisation.Lookingatsomesuccessfulcompany’sStrategyMapswecanseethattheyhavekeptthenumberofobjectiveslow.Forexample,oneoftheUK’slargestretailershas20objectives,AUKhighstreetbankhas12andaglobaladvertisingagencyhas12aswell.
AnotherkeystrengthofaStrategyMapistheabilitytovisualisethe‘causal’relationshipbetweenstrategicobjectives,thatis,howonestrategicobjectivenotonlyinfluencesthevisionbutexertsinfluenceoveranotherstrategicobjectives.Typicallywefindthattheinfluenceflowsfromthebottomofthemaptothetopbutoftenitcanflowfromsidetosideandoccasionallyinbothdirections.Anexampleofacompletedstrategymapwithcausalarrowscanbeseenbelow.
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AlthoughtheStrategymapshouldbeableto‘standup’byitself,asacompany/organisationcommunication,itisofutmostimportancethateachofthestrategicinitiativeshasanassociatedcompletedescriptionthatincludes:
• Afullandconcisedescriptionoftheobjective
• Exactlywhatistobeachievedi.e.theexpectedoutcome
• Whentheobjectiveshouldbecomplete
• Howprogresswillbemeasuredi.e.theassociatedmetric(s)
• Whoownstheobjectiveandthereforeassociatedinitiative(s)
ThekeyquestionsaroundtheassociatedmetricsandownershipwillturntheStrategyMapintoaliving,breathingstrategyratherthananacademicexercisedestinedtotheshelfuntilthesametimenextyear.
Itisforthisreasonthatwestronglyrecommendthatcompanies/organisationslookatperformancemanagementsoftwaretohelpensuretheon-goingmanagementoftheprocess
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SoftwareTheproductionandmanagementofaStrategy(andaStrategyMap)canbeundertakenthroughthenormalmanagementprocessofreviewsandaidedthroughtheuseofdocuments,presentationsandspreadsheets.However,overthepastfewyearsseveralsoftwarepackageshaveemergedthatnotonlyremovetheburdenofcreatingtemplatesinthefirstplacebutprovidethemeanstocreateStrategyMaps,collectandtrackmetrics,collatestrategicobjectives,managestrategicinitiativesandgeneratereports.Mostsystemsalsoincludealertingmechanismstoensureownershipisassignedandinformationiskeptuptodate.AnexampleofaStrategyMapcreatedbyasoftwareproductfollows:
SomeinterestingthingstonoteaboutStrategyMapscreated/generatedbysoftware:
• Theobjectivesarecolour(R/A/G)coded,thisstatusindicatorwillchangeautomaticallywhenthemetricsassociatedwiththeinitiativesareupdated.
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• Thereare‘trend’arrowswhichindicatethestatusoftheobjectiveduringthepreviousreportingperiod;thesoftwarewillretainausefulhistory.
• EachitemintheStrategyMapcanbe‘clicked’ontotaketheviewertothenextlevelofinformationandusuallyallthewaythroughtoassociatedmetrics,initiativesandreports.
Theautomatedstrategicmanagementprocesscanbeeasilyintegratedintoexistingmanagementprocessesthereforekeepingthe‘strategy’aliveandontheexecutiveagendathroughoutthebusinessyear.
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Appendix–SampleStrategyMapsThefollowingexamples(andmore)canbefoundontheIntrafocusresourceswebsite
Publicsectorexample