Strategy maps are single-page, visual representations of organizational Strategy. Their simplicity makes them ideal for communicating big-picture objectives to every employee in an organization – regardless of seniority or project involvement level. A Strategy Map is a visual representation of organizational objectives and how they relate to one another.
Understanding strategy maps
Well-designed strategy maps articulate the role every employee will play in achieving the organizational strategy. They also produce clearly defined objectives with measurable results. Importantly, strategy maps are built from the top down. The organization must first define an overarching strategic objective before identifying the strategy and key performance indicators that will play a role in its achievement.
Most strategy maps are based on the four balanced scorecard perspectives of financial, customer, internal processes, and learning and growth.
We will take a look at these perspectives in more detail in the next section.
Using the four perspectives to construct a strategy map
On a strategy map, each strategic objective is represented by an oval or circle. The number of strategic objectives must be kept under twenty since tracking too many objectives risks diluting the message or making the strategy difficult to communicate.
Each of the objectives is then grouped according to the four perspectives of the balanced scorecard. This helps the business develop predictive, forward-looking strategies that are not solely based on financial performance.
The four perspectives are:
- Finances – encompassing strategies designed to increase shareholder value. Revenue growth and productivity are the two primary objectives measured under this perspective for most companies. For non-profits, the customer or company mission is most important – financial performance is simply a means to an end.
- Customers – directly under the finances or mission is the customer value proposition. For-profit companies tend to focus on either product leadership, operational excellence, or customer intimacy.
- Processes – which describe how financial and customer goals will be achieved. Examples include innovation, market expansion, working toward operational excellence, improving customer relationships, and productive stakeholder relationships.
- Learning and growth – the part of a strategy map detailing the employee skills and experience necessary to ensure processes run efficiently. Company culture and intellectual capital are also important.
Arrows can then be used to illustrate the cause-and-effect relationship between strategic objectives. Consider the example of an airline company strategy map. With a properly trained ground crew (learning and growth), each flight has a faster turnaround time (processes). Faster turnaround times then result in lower prices and fewer delayed passengers (customers), which increases profitability and lowers operating costs (financial).
When completing the strategy map, teams may find that some objectives do not fit neatly into a single perspective. In this case, it may make sense to have them straddling two perspectives. Teams should also realize that it is perfectly acceptable to deviate from the traditional strategy map framework to accommodate unique or particular goals.
Key takeaways:
- A strategy map is a visual representation of organizational objectives and how they relate to one another.
- A strategy map defines strategic objectives according to the four perspectives of the balanced scorecard: finances, customers, processes, and learning and growth. By analyzing the cause and effect relationships between different objectives, teams can develop forward-looking strategies free from a myopic focus on financial performance.
- A strategy map must be built from the top down. With a primary goal or outcome identified, the business must work backward to identify how it will be achieved.
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