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Strategy map

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Generic Strategy Map

A strategy map is a diagram that is used to document the primary strategic goals being pursued

by an organization or management team. It is an element of the documentation associated withtheBalanced Scorecard, and in particular is characteristic of the second generation of Balanced

Scorecard designs that first appeared during the mid 1990s. The first diagrams of this type

appeared in the early 1990s, and the idea of using this type of diagram to help documentBalanced Scorecard was discussed in a paper by Kaplan & Norton in 1996.[1]

The strategy map idea featured in several books and articles during the late 1990 by Kaplan &Norton and others, including most notably Olve and Wetter in their 1998/9 book Performance

Drivers.[2]

Across these broad range of articles, there are only a few common attributes. Strategy maps

show:

Each objective as text appearing within a shape (usually an oval or rectangle) Relatively few objectives (usually less than 20) Objectives are arrayed across two or more horizontal bands on the strategy map, with

each band representing a 'perspective'

Broad causal relationships between objectives shown with arrows that either joinobjectives together, or placed in a way not linked with specific objectives but to providegeneral euphemistic indications of where causality lies.

The purpose of the strategy map in Balanced Scorecard design, and its emergence as a design

aid, is discussed in some detail in a research paper on the evolution of Balanced Scorecarddesigns during the 1990s by Lawrie & Cobbold.[3]

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Contents

[hide]

1 Origin of strategy maps 2 Perspectives 3 Links between the strategy map and strategy development 4 References 5 External links

[edit] Origin of strategy maps

The Balanced Scorecard is a framework that is used to help in the design and implementation ofstrategic performance management tools within organisations. The Balanced Scorecard provides

a simple structure for representing the strategy to be implemented, and has become associatedwith a wide selection of design tools that facilitate the identification of measures and targets thatcan inform on the progress the organisation is making in implementing the strategy selected

("activities"), and also provide feedback on whether the strategy is having the kind of impact on

organisational performance that was hoped for ("outcomes"). By providing managers with thisdirect feedback on whether the required actions are being carried out, and whether they are

working, the Balanced Scorecard is thought to help managers focus their attention more closely

on the interventions necessary to ensure the strategy is effectively and efficiently executed.

One of the big challenges faced in the design of Balanced Scorecard based performance

management systems is deciding what activities and outcomes to monitor. By providing a simple

visual representation of the strategic objectives to be focused on, along with additional visualcues in the form of the perspectives and causal arrows, the strategy map has been found useful in

enabling discussion within a management team about what objectives to choose, and

subsequently to support discussion of the actual performance achieved.

[edit] Perspectives

Early Balanced Scorecard articles by Kaplan & Norton[4]proposed a simple design method for

choosing the content of the Balanced Scorecard based on answers to four generic questions about

the strategy to be pursued by the organization. These four questions, one about finances, one

about marketing, one about processes, and one about organizational development evolved

quickly into a standard set of "perspectives" ("Financial", "Customer", "Internal BusinessProcesses", "Learning & Growth"). Design of a Balanced Scorecard became a process of

selecting a small number of objectives in each perspective, and then choosing measures and

targets to inform on progress against this objective. But very quickly it was realised that theperspective headings chosen only worked for specific organisations (small to medium sized firms

in North America - the target market of the Harvard Business Review), and during the mid to late

1990s papers began to be published arguing that other sets of headings would make more sense

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for specific organization types,[5]

and that some organisations would benefit from using more or

less than four headings.[6]

Despite these concerns, the 'standard' set of perspectives remains the most common, and

traditionally is arrayed on the strategy map in the sequence (from bottom to top) "Learning &

Growth", "Internal Business Processes", "Customer", "Financial" with causal arrows tending toflow "up" the page.[7]

[edit] Links between the strategy map and strategy

development

The strategy map is a device used to communicate context and illustrate the basis managers have

used for choosing a subset of the available measures to report on an organisation's progress inimplementing a strategy. As a device, it is not very helpful or appropriate as a strategy

development tool. However over the years many have suggested that it could be used as a simple

strategy development tool - including Kaplan & Norton in their book "The Strategy FocusedOrganisation" who argue that organisations could adopt 'industry standard' templates (basically a

set of pre-determined strategic objectives) if the managers can't work out a strategy for

themselves. This type of approach is fraught with problems (e.g. what is the competitive

advantage arising from a strategy developed in this way?).

[edit] References

1. ^Kaplan, Robert S.;Norton, David P.(Fall) [1996], "Linking the Balanced Scorecard toStrategy.", California Management Review39 (1)

2. ^Olve, Nils-Goran; Roy, Jan; Wetter, Magnus (1999), Performance Drivers: A practicalguide to using the Balanced Scorecard, John Wiley & Sons

3. ^Lawrie, Gavin J. G.; Cobbold, Ian (2004), "Third-generation Balanced Scorecard:evolution of an effective strategic control tool",International Journal of Productivity and

Performance Management53 (7): 611623,doi:10.1108/174104004105612314. ^Kaplan, Robert S.;Norton, David P.(Jan-Feb) [1992], "The Balanced Scorecard

Measures that Drive Performance",Harvard Business Review70 (1)

5. ^Butler, A.; Letza, S. R.; Neale, B. (1997), "Linking the Balanced Scorecard toStrategy",International Journal of Strategic Management30 (2)

6. ^Kennerley, M.; Neely, A. D. (2000), "Performance Measurement Frameworks AReview", Proceedings, 2nd International Conference on Performance Measurement,

Cambridge, UK

7. ^Kaplan, Robert S.; David P. Norton (2004). Stratgey Maps: Converting IntangibleAssets into Tangible Outcomes. Boston, Massachusetts, USA: Harvard Business School

Press. pp. 7.ISBN1-59139-134-2.

[edit] External links

Strategic decision making and national differences[1]

http://en.wikipedia.org/wiki/Strategy_map#cite_note-butlerarticle-4http://en.wikipedia.org/wiki/Strategy_map#cite_note-butlerarticle-4http://en.wikipedia.org/wiki/Strategy_map#cite_note-butlerarticle-4http://en.wikipedia.org/wiki/Strategy_map#cite_note-prismarticle-5http://en.wikipedia.org/wiki/Strategy_map#cite_note-prismarticle-5http://en.wikipedia.org/wiki/Strategy_map#cite_note-prismarticle-5http://en.wikipedia.org/wiki/Strategy_map#cite_note-6http://en.wikipedia.org/wiki/Strategy_map#cite_note-6http://en.wikipedia.org/wiki/Strategy_map#cite_note-6http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=3http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=3http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=4http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=4http://en.wikipedia.org/wiki/Strategy_map#cite_ref-cmrarticle_0-0http://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/wiki/Strategy_map#cite_ref-owbook_1-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-owbook_1-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-3garticle_2-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-3garticle_2-0http://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Digital_object_identifierhttp://dx.doi.org/10.1108%2F17410400410561231http://dx.doi.org/10.1108%2F17410400410561231http://dx.doi.org/10.1108%2F17410400410561231http://en.wikipedia.org/wiki/Strategy_map#cite_ref-hbrarticle_3-0http://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/wiki/Strategy_map#cite_ref-butlerarticle_4-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-butlerarticle_4-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-prismarticle_5-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-prismarticle_5-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-6http://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/1-59139-134-2http://en.wikipedia.org/wiki/Special:BookSources/1-59139-134-2http://en.wikipedia.org/wiki/Special:BookSources/1-59139-134-2http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=5http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=5http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=5http://en.wikipedia.org/wiki/Special:BookSources/1-59139-134-2http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Strategy_map#cite_ref-6http://en.wikipedia.org/wiki/Strategy_map#cite_ref-prismarticle_5-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-butlerarticle_4-0http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Strategy_map#cite_ref-hbrarticle_3-0http://dx.doi.org/10.1108%2F17410400410561231http://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Strategy_map#cite_ref-3garticle_2-0http://en.wikipedia.org/wiki/Strategy_map#cite_ref-owbook_1-0http://en.wikipedia.org/w/index.php?title=David_P._Norton&action=edit&redlink=1http://en.wikipedia.org/wiki/Robert_S._Kaplanhttp://en.wikipedia.org/wiki/Strategy_map#cite_ref-cmrarticle_0-0http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=4http://en.wikipedia.org/w/index.php?title=Strategy_map&action=edit&section=3http://en.wikipedia.org/wiki/Strategy_map#cite_note-6http://en.wikipedia.org/wiki/Strategy_map#cite_note-prismarticle-5http://en.wikipedia.org/wiki/Strategy_map#cite_note-butlerarticle-4

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Use of the Agile Strategy Map in an agile Enterprise Transition[2]

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292http://www.slideshare.net/lourenh1/adopting-scrum-an-enterprise-transformationhttp://www.slideshare.net/lourenh1/adopting-scrum-an-enterprise-transformationhttp://www.slideshare.net/lourenh1/adopting-scrum-an-enterprise-transformationhttp://www.slideshare.net/lourenh1/adopting-scrum-an-enterprise-transformation