Defining,

Defining, Constructing
Constructing
and
and Using
Using Strategy
Strategy Maps
Maps

Denyelle Bruno
 Defining Terms
• Mission: A concise statement of the reason for
the organization's existence.
• Vision: A concise statement that defines success
“a picture of the future”.
• Strategy: The means by which the organization
plans to achieve its vision.
• Strategic map: A map of the cause-and-effect
chain of strategic objectives by which the
strategy will be implemented.

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 Strategy Map
• A roadmap connecting the
organization’s strategic objectives to
its operational initiatives.

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 Use of The Map
• Most company’s focus on what they
have done and not on the intangible
assets that determined what they
have to do now (and in the future).
• It’s the intangible assets that
represent approximately 75% of the
company’s overall value.

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 Intangible Assets
• Employee capacities
• Databases
• Information systems
• Customer relationships
• Quality
• Responsiveness
• services

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 History
• In the realm of business, the concept of
strategy maps was introduced by Robert S.
Kaplan and David P. Norton. The standard
reference is their book, Strategy-focused
Organization. The strategy map was the
answer of a missing tool between strategy
and the balanced scorecard. It is the
connection between a strategy paper and a
operative implementation plan.

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 When and by whom is it
used?
• Strategy maps can help to describe
the strategy and to communicate the
strategy among executives and to
their employees.
• It provides a vehicle for alignment.
• It’s successful in its ability to show
implications of efforts.

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 How is it different?
• Standard companies success
measures are retrospective (internal
lagging indicators).
• Strategy maps provides a roadmap to
the future (internal leading
indicators).

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 Why are strategy maps
important?
• Strategy maps identify critical processes and
measure how well aligned they are to intangible
assets.
• A one page document that highlights which
process and actions are crucial and which are
secondary.
• It provides visual clarity to help everyone in the
organization discuss and understand the strategy
and their role in helping to attain objectives.
• If the strategy isn’t working, strategy maps can
help track down where things went wrong.

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 The components of a
strategy map
Four perspectives, seen as building blocks:
1. Financial (on top for private sector)
2. Customer (on top for public sector)
3. Internal
4. Learning and Growth

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 Financial Perspective
• Financial results (private sector)
– Profit
– Return on capital
– Cash flow
– Margins
• Financial results (non-profits)
– Income from sponsors or government grants
– Cash flow
– Cost control results

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 Customer Perspective
• What’s the value proposition?
– Price
– Quality
– Availability
– Selection
– Functionality
– Service
– Partnership
– Brand

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 Internal (business)
perspective
• Operations management processes
– Develop and sustain supplier relationships
– Produce products and services
– Distribute and deliver products and services to customers
– Manage risk
• Customer management processes
– Customer selection
– Customer acquisition
– Customer retention
– Customer growth
• Innovation processes
– Identify opportunities for new products and services
– Manage the research and development portfolio
– Design and develop the new products and services
– Bring the new products to market
• Social and regulatory processes
– Companies need to comply with laws and statutory regulations
– Companies would like a good reputation and people friendly regulation that generates customer
goodwill

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 Learning and Growth
perspective
• People (Human Capital)
• Information Capital
• Organization capital or capacity

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 Map Flow
• Flows from the bottom to the top up to final
result.
• Start with highest perspective to identify needs.
• Determine the work that needs to be done to
support the higher objectives.
• Encode the information in the map.
• The arrows of effect are from lower perspectives
to higher perspectives.

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 Constructing a strategy
map
• Strategy mapping comes after the
strategic objectives are developed.
• The strategic objectives should fill in the
top portion of the map “financial
perspective”.
• The map should then be developed from top
down in themes to ensure resources and
processes are in alignment with strategy.

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 Questions to help get at
the content
• Financial Perspective: “If we succeed at our strategic
objectives, how will we look to our shareholders?”
• Customer Perspective: “To achieve our vision how will we look
to our customers?” “What’s our value proposition?”
– Lowest total cost
– Product Leadership
– Complete Customer Solution
– System lock-in
• Internal perspective: “To satisfy our customers, what
processes do we need?”
• Learning and Growth Perspective: “To achieve our objectives
who do we need to employ, and what do they need to know?”

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 Creative Mapping
• Strategy maps can look different
from one another but generally
speaking, the creativity should sit
within the mapping content and not
within the framework itself

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 What’s the relationship
between a strategy map and a
balanced scorecard?
• The balanced scorecard is a translation of the
strategy.
• The strategy’s success is based on internal
lagging factors.
• The scorecard’s success is based on internal
leading factors.

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 Creating a Balanced
Scorecard
Balanced Scorecards should be tightly aligned to
your current strategic plan. The best way to
achieve this alignment is to use your strategy map
as the foundation for the top-level Balanced
Scorecard. The Balanced Scorecard becomes the
strategic “shorthand” that is the framework for
dramatic long- and short-term results.

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The Balanced Scorecard
• Measures what drives performance
• Provides metrics used to measure
business success
• You can’t manage what you can’t
measure
• Success of use is determined by
alignment and focus

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Example of a Balanced Scorecard
Acme Chocolate Company Balanced Scorecard

Mission: To provide every customer with the highest quality and most unique chocolate tasting experience.
Vision: A world in which fine chocolate accompanies every fine dining experience.
Area/Theme Objective Measures Targets Initiatives
Financial:  Improve  Labor Cost  17%  Location negotiation
 Drive EBIDTA Profitability  COGs standards
 Improve Cost  Number of re-  45%  Partner financial
Structure seller partners  10/year standards/contract
 Expand Revenue added per year  $60 per  Weekly financial review
Opportunities  Average Ticket ticket
 Drive Revenue
through increased
Average Ticket
Customer  Quality  Mystery Shop  >90% rating  Mystery Shop Program
 Product  Location  Random QA  >85% audit  QA Audit Program
Leadership  Service visits  quarterly  Quarterly review meeting
 Selection  Competition
Studies
Internal  Supply QA  Plant QA Audits  >90%  Plant QA Audit Program
 QA  Production QA  AA only sites  10/year  Real-Estate quarterly
 Breadth  Real Estate  Plant to shelf  1 week review meeting
Selection speed  Shipping process review
 Speed (freshness)
Learning  Employee who  Service Training  100%  Develop Service Training
 Uncompromised, provide  Chocolate attainment Program
best in class unequaled Chemistry  50%  Develop chocolate
products and knowledge and Training attainment engineer university
services service  P&L Training  100%  Business class for all
attainment business managers

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 Other Resources
• Google has lots of examples of both
strategic maps and BSCs
• Microsoft office Programs - Visio
• Doesn’t need to be high-tech
• Book: Strategy Maps, Converting
Intangible Assets into Tangible Outcomes
by Robert S. Kaplan and David P. Norton

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