Strategy Map

 


Strategy Maps provide a visual representation of the organization primary objectives and the crucial cause and effect relationship that are created among them and which ultimately drive organizational performance (Kaplan and Norton, 2000)

 

From a Balanced Scorecard perspective, Strategy Maps are communication tools used to tell a story of how value is created for the organization. They show a logical, step-by-step connection between strategic objectives in the form of a cause-and-effect chain.

 

Generally speaking, improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows). In other words Strategy maps show how an organization plans to convert its various assets into desired outcomes (Kaplan and Norton, 2000)

 

Origins

Strategy Maps have their origins in the techniques of concept mapping and mind mapping. Concept maps were first developed in 1972 as graphical tools for organizing and representing knowledge (Novak and Canas, 2008). Below it is presented an example of such a concept map.

 

Concept Map - BSC20.com

Source: Novak and Canas, 2008

 

Balanced Scorecard and Strategy Mapping

To further the transformation of the Balanced Scorecard from a performance measurement system to a strategic performance management system, Kaplan and Norton (2000) developed the Strategy Map.

Strategy Maps combine with Balanced Scorecards to provide a new framework for describing and implementing strategy. According to Kaplan and Norton, a Strategy Map is "a logical comprehensive architecture for describing strategy. It provides the foundation for designing a Balanced Scorecard that is the cornerstone of a strategic management system". (Kaplan and Norton, 2001)

Building Strategy Maps requires consensus, clarity and commitment to strategy at the executive level.   
 

  • Clarifying the desired state of evolution for the organization: desire state, mission, vision and value drivers.
  • Specifying objectives in the scorecard areas necessary to realize the organizational  strategy. One of the over-riding contribution of the Balanced Scorecard developments rests in the clarification and expression of the links between performance drivers and their impact on progress towards strategic success, conveyed through the strategy-mapping process.

 

Simply, a Strategy Map charts the impacts of activities. Once maps have been constructed, linking actions and their impact operations can be managed to achieve desired outcomes. An example of a Strategy Map for the Mobile Company as subtracted from Kaplan and Norton (2000) is presented below.

strategy-map-example-bsc20_677

Source: Kaplan and Norton, 2000

 

References

  • Joseph, D., Novak & Alberto J., C. (2008), The Theory Underlying Concept Maps and How To Construct and Use Them, Institute for Human and Machine Cognition, available at: http://cmap.ihmc.us/Publications/ResearchPapers/TheoryUnderlyingConceptMapsHQ.pdf.
  • Kaplan, R. & Norton, D. (2001), The Strategy Focused Organization, Harvard Business School Press, Boston, MA.
  • Kaplan, R., S. & Norton, D., P. (2000), Having trouble with your Strategy? Then Map It, Harvard Busines Review, September-October, 2000.

BSC concept : Components

 

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