Strategy Maps:
A Primer
ONCE YOU HAVE A STRATEGY MAP, THEN WHAT?
Constructing a strategy map, as we’ve said, produces many benefits: senior team alignment, clarification of the strategy, ease of communication to employees, and can help generate enthusiasm by employees for the strategy. But in reality, creating a strategy map is just the beginning of the work required for strategy execution. In our book, Leading Strategy Execution, we devote two chapters to what leaders need to do once the strategy map is complete. Chapter Six, “Aligning Local Effort (Job Three),” acknowledges that strategies get carried out in work units, not at the top of the organization, and guide the reader in thinking through how the top can align itself with the middle-level. Chapter Seven, “Designing Your Organization (Job Four),” addresses, “the art and science of fitting the institutional components of the firm—its structure, business processes, and its entire social system—to the strategy.”
We view strategy execution as a three step process:
Step 1
Step 2
Step 3
Deploy the strategy, engage the workforce
Put simply, once you have a strategy map, the intentions captured in the bottom two tiers of the strategy map must be articulated in the form of specific objectives, metrics attached, and both due dates and accountabilities assigned.
Does all of this seem like hard work? It is! In our view, “Two D’s” separate market leaders from everyone else: Discipline—doing the work above—and Diligence, which means doing so relentlessly. Think of any winning sports team or business you admire: did they get where they are without discipline and diligence? We don’t think so, either.
Executives often use slides like this to communicate their strategies. Note that several different interpretations are possible. For example, does increasing market share cause or result from introducing new products? It tells no story, it is not compelling in any way. What new products? Why? And if “Beating the competition” is a strategy, we’ll eat our hat! 90% of the strategies we see are nearly as inadequate as this one.
BENEFITS OF A STRATEGY MAP
The process of constructing a strategy map aligns a senior leadership team and permits it to do several things:
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• Set vividly clear targets in two areas: financial results and the customer results that will lead to them.
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• Trace the causal connections between various elements of the strategy and the results, showing what activity leads to what results.
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• Tell a compelling story about the company’s aspirations and how they will be achieved.
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• Identify the critical organizational capabilities that will undergird and support the key value-adding business processes—and what those business processes are.
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• Provide a starting point for every work unit to identify the actions it must take to support the overall enterprise strategy.
A VERY SIMPLE ENTERPRISE STRATEGY MAP
Below is a very simplified strategy map. It depicts how Southwest Airlines (SWA) creates value. Please note that in our use of the language of strategy maps, we use slightly different wording than do Kaplan and Norton. Most specifically, we use the term “Organizational Capability” rather than their term “Learning and Growth,” because we think it more clearly communicates what this dimension is all about.
SWA’s is a strategy based on low fares, and the means of accomplishing this is by making the most efficient use possible of their aircraft. The term “Fast ground turnaround”—in the Business Processes row—sums up the intention. How to achieve this? Through “World-class teamwork,” in the organizational capabilities row.
VARIATIONS ON A THEME
Pictured below are variations on strategy maps we have created. While they all look different, they convey the same information:
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• Financial results sought
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• Customer results that must be delivered to get those financial results
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• Business processes necessary to create value for customers
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• Organizational capabilities required to support the business processes
A strategy map is a graphic portrayal of an organization’s strategy showing how various strategic initiatives will lead to customer results and, in turn, to financial results. A strategy map can depict the aims and intentions of an entire corporation or the plans of just one part of the organization.
The strategy map concept is not a new tool; it was introduced by Kaplan and Norton (1996) in their book, The Balanced Scorecard: Translating Strategy into Action. In that volume and in each subsequent book on the Balanced Scorecard, Kaplan and Norton have discussed strategy maps. Their book, entitled Strategy Maps: Converting Intangible Assets into Tangible Outcomes (2004), is devoted to the topic. In that book, Kaplan and Norton write, “The strategy map has turned out to be as important an innovation as the original Balanced Scorecard itself.” (Kaplan & Norton, 2004, page xiii). If you don’t want to read 450 pages on the topic (Kaplan & Norton), read this tutorial and then Chapter Eight in our new book, Leading Strategy Execution.
HOW STRATEGY IS USUALLY COMMUNICATED (Poorly)
What is a Strategy Map?
We built this colorful map for an international publisher. More below.
When a support function builds a strategy, the customer results of consequence are those of the internal business units, not external customers. In other words, the IT function exists to support business lines; what results do they need to get? This is what goes on a support function’s map.
These are the business partners’ financial results, not IT’s!
These are the capabilities and processes that the IT function must put into place in order to deliver value to the business lines.
EXAMPLE OF A FUNCTIONAL UNIT STRATEGY MAP
Working from simple to more complex, below is the map we helped the CIO of a medical devices company build for the IT function. Reality: IT exists only to support business lines accomplish their goals. Therefore, in the Customer Results row, IT has represented the principal needs that each business line has of IT, i.e., support in bringing new products to market quickly, and reliable IT service.
In turn, IT’s Business Processes must reflect those customer needs and IT must build processes to deliver that value. These should be spelled out in documentation accompanying the Strategy Map. The bottom row, Organizational Capabilities, calls for strategic activities and initiatives that support delivering value to the customer.
EXAMPLE OF AN ENTERPRISE STRATEGY MAP
You can see from the hard-to-read illustration below why most of our clients commit their enterprise map to a larger piece of paper! In this case, a water filtration and analytical services company has three distinct lines of business. Arguably, each could have its own strategy map, and in fact, each business leader did build their own map. But here, you see the entire portfolio depicted at one go. The “bubbles” that span more than one business line, e.g., “Preferred Vendor/Operator,” in the Customer Results segment, is a customer result that each of the businesses needs to get.
SECTIONS:
How Strategy Is Usually Communicated
Benefits Of A Strategy Map
A Very Simple Enterprise Strategy Map
Example Of A Functional Unit Strategy Map
Example Of An Enterprise Strategy Map
Variations on the Theme
Once You Have a Strategy Map, Then What?
We developed this map with the senior team of an international publishing company. The team was intrigued with space flight as a metaphor for their strategy.
The “squiggly” lines on the map simulate the writing participants did on the map itself, a 3’x4’ laminated document.
We developed this map with the senior team of a pharmaceutical manufacturing company. They used it in a meeting of 600 employees to communicate the strategy and focus employees on the need to improve quality.
Participants wrote in the blank spaces on the map, a 3’x4’ laminated document. Dozens of these maps hung for months in work areas in the plants.
This case is described in Chapter Eight of our book, Leading Strategy Execution.
We created this map with and for the Board and senior leaders of a prominent private school in the Philadelphia area.
The final deliverable included a 20-page narrative explaining the map and a strategy execution plan.
We are now working with the Director and senior leaders to execute the plan.
To learn more:
Get our book, Leading Strategy Execution
Get the first three Chapters of LSE FREE
Read Kaplan and Norton’s book, Strategy Maps
Learn about how we use strategy maps in aligning senior teams
Read our blogs:
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