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Telling Your Strategic Story with Strategy Maps

From measurement to Strategic Management and beyond

The Balanced Scorecard has continuously evolved since its inception in 1990. First came the transition from measurement to strategic management system by forging links between the Scorecard and critical management endeavors such as budgeting, compensation, and performance reviews. Our knowledge of measurement has also expanded significantly over the life of the tool, with sophisticated metrics such as “strategic job readiness” appearing more frequently in well-informed Balanced Scorecards. Perhaps the most powerful breakthrough of the Scorecard, however, is its ability to communicate strategy clearly and succinctly to all stakeholders of an organization through the advent of Strategy Maps.

The earliest adopters of the Balanced Scorecard were attracted to the notion of supplementing financial measures with the drivers of future financial success, thereby bringing a healthy dose of balance to a measurement landscape long dominated by short-term, financially-oriented metrics. The tool skyrocketed in popularity but some organizations hit turbulence during their trajectory in the form of incorrect measures, which demonstrated little insight into strategy execution. To overcome this vexing and potentially game-changing issue, Scorecard adopters began prefacing their discussion of measures with one-off objectives, asking “What must we do well in each of the perspectives in order to execute the strategy?” Doing so created a context for the measurement challenge, making the selection of metrics, a task that always proves challenging, somewhat less complicated in the light of day provided by clearly articulated objectives.

As Balanced Scorecard teams began developing objectives from their strategies, they instinctively began linking them together, using arrows to depict patterns of cause and effect. For example, items such as quality and training were no longer disparate elements of a strategy, but were linked together through a bold line on a flip chart or white board: “If we provide focused training to our employees, that will allow us to produce high-quality products with fewer defects.”

Drawing the relationships among objectives served several important purposes: it allowed Scorecard developers to quickly grasp important interdependencies, question assumptions, and simply create a better description of their unique strategies. The Strategy Map was born, and as Kaplan and Norton observed, “(it) has turned out to be as important an innovation as the original Balanced Scorecard itself.”

What is a Strategy Map?

A Strategy Map is a one-page graphical representation of what you must do well in each of the four perspectives in order to successfully execute your strategy.  Let’s break that definition down to understand the concept more thoroughly. Although your strategic plan may run anywhere from ten to one hundred pages (or possibly more), the Strategy Map must be confined to one page, because at its core it serves as a communication tool – signaling to everyone in the organization what you must do well in order to execute your strategy.  It’s simply not reasonable to expect every one of your employees to thoroughly read, understand, and begin acting upon the frequently dense rhetoric of the strategic plan. The Map, however, should be directly translated from the strategic plan and, when skillfully created, will clearly demonstrate what must be done in order to execute the plan. Designed to clear away any clutter or confusion that may exist in the plan, the Strategy Map provides absolute clarity on the road ahead and simplifies day-to-day decision making for employees faced with innumerable choices. Our definition notes that the Map is a “graphical representation.” As we all know, a picture tells a thousand words, and can often convey at a glance what it could take reams of pages to accurately represent. The best Strategy Maps use compelling images to bring the objectives to life, allowing your employees to instantly make a powerful connection with the strategy. As an example, look at the wonderful Map of Food for the Hungry U.S.(pages 20-21) The Map for this humanitarian organization weaves pictures of those they serve with their vital mission and vision, and of course the critical objectives they’ve selected to lead their charge to strategy execution. Note also how they’ve made the Map their own by re-naming the four perspectives of the model to terms that reflect their culture and unique use of the tool.

 

strategy map_diagram

Finally, “What you must do well” is answered in the form of objectives, concise statements beginning with a verb appearing in each of the perspectives, for example, in the Financial perspective you may have objectives such as “Increase Return on Investment,” or “Improve Asset Utilization.” The Employee Learning and Growth perspective may include objectives like “Leverage technology to execute strategy” and “Close skill gaps.” Don’t lose sight of the fact that the Strategy Map is just that, a Map, and therefore the objectives serve as landmarks or guideposts to lead the way in your journey from strategy formation to execution.

Creating a powerful Strategy Map

Once you’ve gathered your executive team and put in the intellectual sweat to create a Strategy Map for your organization, how do you know it will be effective? Here are some tests you can apply to judge the efficacy of your Map:

(1) Choices – A well-constructed Strategy Map must contain only the most essential objectives necessary to execute your unique strategy. Although the actual number will depend on the organization, as a rule of thumb you should be able to ‘tell the story of your strategy’ in ten to fifteen objectives. Many organizations resist this notion and crowd their Maps with every conceivable notion, leaving no strategic rock unturned. But too many objectives will confuse employees who are looking to the Map for clarity and simple directions. Challenging as it may be, the task of making strategic choices is ultimately a rewarding one. As author Michael Gelb notes: “The discipline of ordering…the discipline of choosing one over another, ranking one a level higher than another, and then articulating why you chose the way you did requires a depth and clarity of consideration and comparison that inspires richer appreciation.”

(2) Balance – The Strategy Map is an integral part of the overall Balanced Scorecard process and thus we would expect a roughly equal mix of objectives across the four perspectives of the model. If you’re preaching teamwork, quality, and responsiveness to customers, yet your Map is overwhelmingly dominated by Financial objectives, you’re not adhering to the principles of balance. Despite your calls to the contrary, what you’ll ultimately communicate in that situation is that the bottom line is all that really matters.

(3) Story – Psychologist Jerome Bruner has concluded that facts are twenty times more likely to be remembered if they’re part of a story.  In keeping with this, and consistent with the Map’s overall purpose, the objectives should weave together through the perspectives to tell your strategic story. This is often accomplished through cause-and-effect linkages among the objectives, demonstrating how they work together to produce strategic results. A compelling story is told when we see how investments in intangibles (Learning & Growth perspective) yield improvements in key processes, which drive customer buying decisions, ultimately resulting in improved financial results. Don’t feel, however, that you must link every objective on the Map to another higher up in the document. Doing so may produce what are often termed “spaghetti diagrams” which not only produce eye strain but instantly diminish the power of the Map in telling your story in a simple and coherent way.

(4) Realistic Objectives – Developing objectives for a Strategy Map is challenging but rewarding work and it’s not uncommon for over-zealous Map builders, often with the best intentions in mind, to get a bit carried away in their ambitions and populate the Map with objectives that are unfocused, could take years to complete, or both. A case in point is the seemingly valid objective of “Re-engineering all processes.” Even the smallest organization could have dozens of key processes and critically examining each one is simply not feasible in the timeframe of the Map. A more beneficial approach would be to choose one crucial process and re-engineer it during the next twelve months.

Constructed properly, the Strategy Map can be a transformational tool in your execution efforts. To ensure you’re getting the most from your investment, gauge your Map using the criteria above.

i Paul R. Niven, Balanced Scorecard Diagnostics; Maintaining Maximum Performance (New York, NY, John Wiley & Sons, 2005) p. 64.

ii Robert S. Kaplan and David P. Norton, Strategy Maps (Boston, MA., Harvard Business School Press, 2004) P. xiii

iii Michael J. Gelb, How to Think like Leonardo daVinci (New York, NY, Bantam Dell, 1998)

iv Jeroen De Flander, The Execution Shortcut (Brussels, Belgium, The Performance Factory, 2013)

 

Paul Niven is a noted speaker and writer on the subjects of Strategy, the Balanced Scorecard, and Performance Management. He has delivered keynote addresses at conference events around the world and has published in a number of noted journals. His first book, “Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results” has been translated to fifteen languages around the globe.

 

Paul

Paul has more than a dozen years experience developing Performance Management systems for Fortune 1000, small and medium sized companies, public sector agencies, and nonprofit organizations.

Paul is also the founder of The Senalosa Group, a consulting firm exclusively dedicated to helping organizations reach the breakthrough results that can be achieved by creating a winning strategy and executing it with the Balanced Scorecard.

www.senalosa.com

 

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